Increase revenue

Yield management has evolved over the years thanks to machine learning and advanced analytics,
changing the way people think about hospitality. Since arguably the main concern of hoteliers is revenue,
it’s important to note the main advantage of yield management is that it allows hotels to increase
revenue even if the hotel is not at 100% occupancy. Essentially, as revenue managers and hotel owners,
you can take advantage of the demand forecast, maximizing the average revenue per available room, per
night

Since costs do not fluctuate in the same way as demand, hotels can raise the price of the room during
peak season, and sell the same number of rooms at a higher price, hence maximizing revenue.

All these factors can be reduced to supply and demand: with higher demand, people are willing to pay
higher prices. In fact, studies have shown that hotels using this type of revenue management system
have noted improvement in average daily rate, occupancy and specifically shoulder night
revenue (dates that are very close to high demand dates).

Understand booking patterns

Not all customers are built the same. Some book on short notice and others book months in advance. If
hoteliers have a clear understanding of booking patterns, with this type of management system, they
can adapt the prices to booking behavior. For example, you can penalize last minute bookers with high
prices and in exchange, set lower prices for those booking well in advance, and be sure to cover fixed
costs. Hotels already offer discounted prices in low season, and higher prices during high season, but
using this system of variable prices, you can adjust those prices according to when the client books.

Increase your value perception

Perceived value is what consumers think the product is worth to them and in essence, they are
willing to pay more for scarce goods. This same concept applies to the hotel industry: consumers are
willing to pay more during peak season because the perceived value is greater. Employing a variable
pricing scheme, you can build this perceived value in the mind of the customers, incentivizing them to
book further in advance, and thereby use marketing strategies to help boost this perceived value.

Eliminate pricing errors

Using an innovative hotel revenue management program, revenue managers and hoteliers can assure
that there’s no chance for human error because prices are chosen based on demand forecasting,
instead of expected booking behaviors. This kind of management program allows you to bring hotel
management into the future by automating processes through technology. With a clear set of data from
software integrations you can choose the best room rates for the time period based on clear data.

Effectively segment your customers

Market segmentation is key to any business strategy, and an effective forecast can help capture the
subtleties of this market segmentation. Some of those nuances can be identified by booking trends and
patterns as well as intentions to book and guest preferences.

Throughout the year, hotels benefit from a variety of different guests from solo-travelers to family groups
to corporate guests, among others. Using this strategy, hotels can identify the segments that they may be
missing out on and adapt their marketing strategy accordingly.
Furthermore, since different types of guests have different requirements, another advantage of this type
of integration is the ability to set a variable price rate for different segments based on different factors.

For example, hotels can offer lower prices to leisure family groups who tend to book in advance, spend
more, and tend to look for better amenities and services. On the other hand, you can offer higher prices to
corporate guests who tend to book last minute, stay for a shorter period of time, and are less likely to
compare prices.