A MONTHLY DIGEST TO INFORM AND ENLIGHTEN MEETING AND EVENT PLANNERS July-August 2006 Edition
VOL. 4 ISSUE 6
Yield/revenue management helps make better decisions BY AMANDA JOINER CMP, CMM
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• Helpful in identifying problematic situations or opportunities in advance • A way of guiding the hotel to create a profitable market mix
s a planner, you’ve probably heard rumblings about the In a nutshell, revenue arrival of the age of yield or management is a process for revenue management within making better business deciCanadian hotels, or been sions within hotels, based on faced with the task of dealing the economic premise of supwith that new breed of hoteply and demand. When the lier – the ‘revenue manager.’ supply of available hotel While most meeting and rooms is scarce relative to event planners know that demand (for example during yield management is a new the Toronto International trend affecting their industry, Yield/revenue management is now commonplace in hotels. Film Festival, the Calgary most don’t have a clear Stampede or the Montreal understanding of how it Grand Prix), hotel room rates will tend to increase. Conversely, works – or how they can make it work for them! Before we delve into the deep, dark world of yield management, a surplus of supply compared to demand will cause hotel rates to fall. The optimum price point for sellers and buyers (hotelet’s debunk the myths and clear up some stereotypes that exist. liers and planners) — is the point where supply and demand intersect (where hotels charge a price that planners are willing Yield/revenue management is not… to pay, resulting in most hotel rooms being fully booked). • A process to squeeze planners for higher rates every time Knowing in advance (based on historical data and computer • Inflexible and based ONLY on the numbers modeling) when these times of high and low occupancy are • Reliant on hotel competitors directly sharing information likely to occur – and adjusting room rates accordingly – is what • Run by a person who doesn’t understand customer service or yield management is all about. ongoing business relationships The airlines have been utilizing sophisticated yield manage• The worst concept to come along since shag carpeting! ment techniques for years (thus the constantly changing rates that fluctuate minute by minute based on available occupancy on individual planes). Now, these same tools are becoming So then, what IS yield/revenue management? It is… • A hotel management process based on mathematics and ‘business as usual’ for the Canadian hotel industry as well. Sounds complicated, doesn’t it? It doesn’t have to be. Think of trends • An approach that allows hotels to predict future trends from revenue management as similar to a game of Tetris: The object is to get all of the puzzle pieces to fit into the right spots. historical data Planners and hoteliers hold these pieces (groups and the • Based on data that is extracted from the marketplace via a facilities to house them), and can benefit based on where they third party • Typically administered by a committee of hotel management fit best. that includes key department heads, including sales and CONTINUED ON PAGE 3 convention/event services