How Yield Management Can Improve Hotel Revenue in 2009

Hotel yield management has always been an important concept for hotels especially because the demand for hotel inventory fluctuates according to the season. Through the years, hotels have been able to cope with the changing supply, demand, and profitability to be had from the market. But almost none of them have encountered the unique challenges present in 2009.

Many hotels are now fighting for their very survival. As the financial market sank in 2008, the reverberations of this trend are still being felt today. In this period of RevPAR stagnancy or decline, it is important for hotel revenue managers to look outside the box and create innovative solutions.

Creating a Revenue Management Strategy

It is important to go back to the essence of yield management. At its core, it means maximizing profits from a perishable source. So how is a hotel inventory perishable? Well, a year’s worth of inventory will lessens each day whether or not someone occupies it. Effective yield management helps create gains in revenue as against expenses.
Looking beyond the actual room rate to increase RevPAR into the value that the hotel can offer is a good yield management tactic. If the hotel revenue managers are attuned to the economy, they can cope with the situation better. This means they need to analyze market tendencies, research the hotel’s main market and submarkets, and track the performance of competing establishments.

Coming up with accurate figures will help hotels boost profitability especially during slow periods because it can potentially increase the hotel occupancy rate significantly. In addition, an effective revenue management strategy also necessitates the access to updated market area. For example, the vicinity of the airport, the number of surrounding offices, and the scenic location are all factors that might contribute to the increase or decrease of hotel sales.

Putting Yield Management to Work

The market is now wiser than ever before and this has affected how yield management is practiced in the hotel industry. In theory, these practices might be straightforward but in actuality, it requires you to be on top of your game.

If you previously offered hotel rate discounts for convention participants to lengthen the duration of their stay, hoteliers today need to know the tendencies of each segment in order to maximize it. Offering actual solutions instead of price cuts is the more effective way to increase RevPAR and ultimately hotel profits.