YIELD MANAGEMENT

Co-Sponsored by BERRY, DUNN, McNEIL & PARKER and the MAINE INNKEEPERS ASSOCIATION

YIELD MANAGEMENT TRIAL AND ERROR
”Those who try to do something and fail are infinitely better than those who try to do nothing and succeed." -Lloyd Jones

INTRODUCTION
• Revenue Management Defined– Maximizing Profits from the sale of all goods and services offered by the Hotel

• Yield Management Vs. Revenue Management
– Focus on Room Sales through strategic Price and Inventory control during the reservation process

ORGANIZATIONAL GOALS
• Setting Goals and Objectives
– Creating a Property Vision – Establishing a Sales Orientated Culture – Yield Formula - Actual Rev./Potential Rev.

• Revenue Management Procedures
– Active Management Participation – Regular Revenue Meetings – Experimentation

THE YIELD MANAGEMENT PROCESS
• Research • Forecasting Unconstrained Demand • Target Potential “High Return” Periods • Tools to Control Incoming Reservations • Monitoring and Feedback Systems • Adjustments to Original Plan

RESEARCH
• Historic Trends
– – – – Define Market Segments Evaluate Demand by Market Segment Utilize Historic Booking Practice Data Tracking Regrets and Denials

• Competition
– Changes to the Marketplace • New Rooms • Renovations - Upgrades • Property Closings

RESEARCH (cont.)
• Pricing Patterns
– – – – Market Leader Mid Market Economy Segment Special Event Pricing

• Market Trends
– Overall Demand Patterns • Weekends ? ? • Midweek ? ? • New Activity Patterns

RESEARCH (cont.)
• Special Events
– Analyze Area Events Calendar – School Vacation Schedules – Holiday Day of Week Patterns
• 4th of July, Christmas, Columbus Day, etc.

FORECASTING UNCONSTRAINED DEMAND

• Unconstrained Demand =
Number of Rooms that have been Sold + Number of Rooms that can be Sold - No Shows and Cxl. Reservations

SAMPLE DEMAND CHART

TARGET POTENTIAL HIGH YIELD PERIODS
• Unconstrained Demand is Greater than Supply • Strong Historic Trend Information • Current Year Event Calendar Information • Successful (or Budgeted) Marketing Efforts

TOOLS TO CONTROL RESERVATIONS
• Stay Pattern Controls
– Minimum Night Requirements - 2 or 3 night – Long term stay discount - 5 or more nights – Closed to Arrival - No Saturday Arrival

• Inventory Limitations
– Smaller Lower Priced Rooms Closed (sold out) – View Feature Rooms Closed (sold out)

TOOLS TO CONTROL RESERVATIONS (cont.)
• Controlling Price - Use Rate Categories!
• Stratosphere - Absolute Peak Demand Periods • Atmosphere - High Season Rates • Sky-Shoulder Season Weekend • Earth- Shoulder Season Mid-Week • Lowest Possible Profitable Price

GROUP BUSINESS
• • • • • The Foundation of the Revenue Structure Blocking Policies and Requirements Checking Group History Cut Off Dates and Attrition Cost/Benefit Analysis

MONITORING / Feedback System
• Document All Control Restrictions • Check Reservation Status Continuously • Create Denial tracking Report • Why, When, ...Today, This Week, YTD • Frequent Revenue Meetings with Key Staff • Compare Actual Occupancy with Original Forecast

REVENUE MEETINGS
• • • • • • • • At least Weekly Include all Key Managers and Staff Review Previous Week’s Results Preview Upcoming 14 Days Look Long Term - 30, 60, 90 Days Out Discuss any Recent Changes Document Decisions Training Video - Educational Institute AHLA

ADJUSTMENTS TO ORIGINAL PLAN
• • • •

90, 60, 30 Day Benchmarks Re-project Unconstrained Demand Increase or Reduce Controls Document all Control Changes

THE YIELD MANAGEMENT PROCESS (REVIEW)
• • • • • • • Research Forecasting Unconstrained Demand Target Potential High Yield Periods Tools to Control Incoming Reservations Monitoring and Feedback Systems Adjustments to Original Plan

YIELD MANAGEMENT AUTOMATION
• Description of Software Function • Advantages • Costs

AUTOMATION (cont.)
• Levels of Computer Systems
 Rule Induction - Rate quotes based upon
Fixed demand versus forecast. Simple - Easy to use.

 Expert Systems - Rules-based system using
artificial intelligence to analyze booking situation.

 Optimization - Calculates best solution from
various economic factors. Requires management interaction.

 Neural Networks - Programs learn as they go.

YIELD MANAGEMENT

Presented by Art Marshall, MPS AVA Berry, Dunn, McNeil & Parker 100 Middle Street Portland, ME 04104 207-541-2271 amarshall@bdmp.com

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