Yield Management in Hotels – If you are from the hospitality industry, you must have heard the term “yield management in hotels” at least once, especially during recent years.

If not, Incode Business Services will explain it here!

Incode Business Services is a specialized hotel consultant in India renowned for its personalized approach, high-quality service, and consistent results delivery. We guide hospitality owners and operators to become local market leaders by using creative strategies and techniques to reposition and turnaround management.

The team of Incode Business Services is driven by results and aims to uncover the hidden revenue potential of hotels.

What is Yield Management?

In simple terms, yield management is one of the most crucial pricing policies utilized by businesses in the hospitality and tourism industry. The idea of this pricing policy is to generate maximum revenue by adopting a strategy based on selling to the right customers, at the right time, at the right price.

Importance of Yield Management in Hotels

Adopting efficient yield management in hotels strategies helps the business generate more revenue by utilizing the finite number of rooms, which need to be sold during a specific time frame.

The yield management team of Incode Business Services helps hotel businesses and managers focus on optimizing the pricing and selling strategy of the single most crucial resource – the unoccupied rooms.

 Techniques of Applying Yield Management in Hotels 

• Inelastic vs. Elastic Demand

The success of yield management in hotels techniques depends on the efficiency of hotel managers and how they manage the inelastic and elastic demands. Elastic demand refers to the number of room reservations that will take place because of being in business.

Keeping in mind the location and the image of hotel projects, hotel managers can often determine the degree of elastic demand. For example, a hotel near an airport will receive more requests than the one located in the middle of a city.

On the other hand, elastic demand is the demand that is created through promotions and pricing strategies, and yield management in hotels is pivotal in maintaining a balance between elastic and inelastic demand.

• Protection Level Estimations

One of the typical starting points of yield management in hotels is setting a standard protection level and booking limit. The protection level is the number of rooms made unavailable for advance reservations at discounted rates to make it available for last-minute customers booking these rooms at a higher rate.

Subtracting the total number of rooms available from the rooms made available for protection level helps determine the booking limit of the hotel.

Along with it, historical demand data, forecasting, and seasonality help hotels determine the booking limit of your hotel for a specific timeframe, and you can prepare your hotel revenue management accordingly.

• Dynamic Pricing

This technique of yield management in hotels works by adjusting the pricing based on customers’ willingness to pay. This pricing technique is more beneficial in attracting customers who are sensitive to money but not sensitive to time.

Hotels follow a dynamic pricing policy to fill up the rooms during off-peak seasons and off-peak times and use discounted booking rates on hotel rooms categorized as protected but haven’t been booked.

• Overbooking

This is a tricky strategy for yield management in hotels. It indeed increases the hotel’s revenue, but it negatively impacts the hotel’s reputation. Done well overbooking can lead to revenue generation without loss of reputation.

Overbooking strategy on yield management in hotels is based on the concept that a certain percentage of people will book the hotel room but will not come.

Therefore rather than face the loss of revenue, hotels book more rooms than what is actually available. The decision on how much to overbook depends on the results of opportunity cost analysis or the cost of the hotel choosing one decision over the other.

 Yield management in hotels is all about making the best use of hotel resources to maximize revenue – and it all depends on the competence of hotel managers.

Incode Business Services – Professional Yield Management Consultants

Get professional yield management in hotels by hiring the expert services of Incode Business Services and witness the flow the revenue by adopting simple pricing policies and strategies.

Get in touch today!

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