WHAT IS THE YIELD MANAGEMENT?
Yield management: What is it?
Yield Management or Revenue management corresponds to a set of techniques aimed at optimizing the turnover of a hotel, campsite etc… It works by making the pricing (the price list) of a hotel, a campsite, a tourist establishment, an aircraft, a boat, a car park, a hairdressing salon etc… dynamic.
These techniques, which were initially focused on price, have been improved with other functions such as arbitrage of sales channels and variation of commission costs. Add to that the arrival on the market of many algorithms whose purpose is to limit unsold items or to prevent the risk of cancellation. Yield management in hotels, campsites etc… also involves questions of web marketing, CPC campaigns. The spectrum is therefore broad, and is gradually becoming a mixture of statistics, marketing and management control.
What is the objective of the yield management (Revenue management)?
We can summarize the revenue management objective as follows: maximize revenue (and margin) under cost, objective and availability constraints. Remember, a hotel room that is unsold on the day of your stay is a lost room.
The basic idea: Sell the right product, at the right time, at the right price, to the right customer in order to boost gross margins.
It should be noted that yield management techniques in the world of accommodation (yield management for hotels, campsites, resort residences, etc.) are inherited from the field of aviation, a precursor in this subject. However, they are reinventing themselves because, unlike a plane that can fly back and forth during the day, the hotel room can only be sold ‘theoretically’ once a day.
What are the mechanisms of yield management (Revenue management)?
Pricing is subject to real-time optimization through an institution-specific data flow or external data. These are market constraints and direct or indirect competition.
In the case of a hotel, for example, it will be the market sorted by category, but also the direct competitors in the neighbourhood.
It is therefore the law of supply and demand that will be at the centre of price regulation. The higher the demand, the higher the price will tend to increase. The lower the demand, the more prices will tend to fall.
Yield Management (Revenue management) is now a necessity whereas it was still an option a few years ago.
How does yield management (Revenue management) work in hotels?
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