1. Yield/Revenue Management 101
The goal of this presentation is to
understand the terms and
processes involved in Revenue
and Yield Management.
DESINGED BY
Sunil Kumar
Research Scholar/ Food Production Faculty
Institute of Hotel and Tourism Management,
MAHARSHI DAYANAND UNIVERSITY,
ROHTAK
Haryana- 124001 INDIA Ph. No. 09996000499
email: skihm86@yahoo.com ,
balhara86@gmail.com
linkedin:- in.linkedin.com/in/ihmsunilkumar
facebook: www.facebook.com/ihmsunilkumar
2. Lesson Objectives
After completion of this lesson the learner will be able
to :
□ Define the terms associated with revenue
management
□ Explain the process of maximizing revenue and
how revenue management can help achieve this
□ Describe the role of the Global Distribution System
in Revenue management
□ Define ways to measure Revenue management
success
4. So what does that definition
actually mean?
□ Selling the right product
□ Correct brand, room type, and/or meeting space
□ To the right customer
□ Transient or Group/Business or Pleasure
□ At the right time
□ The booking window of how far out guests book
□ For the right price
□ Properly position rates for each segment
5. Maximize Revenue
“Maximize Revenue” can be broken down into three main activities:
Maximize Revenue
Pricing Strategy
How do we price our
product?
Inventory
Management
How many rooms
are made available
at each price point?
Selling Strategy
How do we sell our
product?
6. □ Price the product (rooms) appropriately based on
seasonality (changes in customer mix, demand, etc.)
□ Focus on forecasted demand for the rooms and develop
restriction and authorization strategies that will capture the
highest possible revenue from that demand.
□ Implement selling strategies that make sense to the
customer, support the brand’s selling philosophies, and
maximize the property’s revenue.
So, how does Revenue Management help to
accomplish the goal of maximizing
revenues?
7. Pricing Strategy
Pricing is the process of determining the rates that will
ultimately define the product in the marketplace. It is a
long-term strategic plan designed to target specific
customers and offer them the best possible price/value for
their money. The customers’ willingness to pay a certain rate
is directly related to the “perceived value” of the room.
When establishing a pricing structure, there are three factors
to consider.
□ The Customer
□ The Property
□ The Market
8. Inventory Management
Translating the customer selection
process into restrictions
Stay controls are used to FILTER out EXCESS
DEMAND. The timing of your revenue management
decisions in conjunction with other factors such as
arrival/departure patterns, average length of stay, etc. will
dictate which control to use.
Minimum Stay Close to Arrival
Maximum Stay Close inventory/GTD
Allotments/Tally Block/Group Only
9. Demand
□ Demand: is defined as all of the people that want
to stay at the property (demand is not
constrained/impacted by physical capacity,
restrictions, or availability of rooms.
□ Demand is calculated by: Rooms sold PLUS demand
turndowns. Demand turndowns are rooms that
were turned away due to restrictions or lack of
available inventory.
The goal of Revenue Management is to capture the most room
revenue from existing demand, thus maximizing revenue.
You may ask yourself, what is demand?
10. Filter or Wall?
□ Rate Controls
□ Closed to Arrival
□ Minimum Stay
□ Maximum Stay
□ Close All-Block-Zero out inventory
□ Allotments
□ Block Only-Group Only
□ Close 6pm/4pm
Stay controls act like filters, holding back some transient
business while letting other business to pass through. Other
controls are like a wall – stopping transient business all
together. Identify if the following controls are filters or walls
11. How do we maintain rate integrity and
restrictions when all those other booking
engines (Internet) are discount options for
our customers?
GLOBAL DISTRIBUTION
SYSTEM
12.
13. The GDS Marketplace
□ GDS represents 19% of Lodging Room Revenue
□ GDS is the preferred booking vehicle of travel
agencies
• 80% of all reservations made by agents for Marriott brands are booked via GDS
□ Marriott owns the highest market share in the
GDS channel at 20%
□ GDS is the 2nd largest source of reservations for
Marriott Lodging
14. Are We Alone?
□ Airline seats - once
the aircraft departs
with an empty seat,
there is no longer a
revenue opportunity
associated with that
seat.
□ Travel Industry
□ Car Rental Agency
□ Media Advertising
□ Hobbies - Golf,
Horse Riding etc.
□ PRODUCE
15. MEASUREMENT OF SUCCESS
□ Once the appropriate actions have
been effectively implemented, they
must be measured for their success.
The cornerstone of measurement for
any effective Revenue Management
strategy is to focus on RevPAR
16. How do WE measure our Revenue
Management success?
□ Occupancy?
□ Avg. Daily Rate?
□ Accurate
Forecasting?
□ Revenue?
□ Exceeding budget?
□ Revenue per
Available Room?
0
10
20
30
40
50
60
70
80
90
100
My Hotel
Occup %
ADR
RevPAR
17. RevPAR!
□ Occupancy is an incomplete
measurement because it fails to
account for lost revenue due to varying
room rates.
□ ADR is an incomplete measurement
because it fails to account for lost
revenue due to unsold rooms.
□ RevPAR blends both occupancy and
ADR
