The Airline industry? Yes.
In the early 1900s, airlines were not a profitable business. Airlines were struggling to find a way to make money on flights. One of the ways they found was revenue management. This allowed airlines to sell more tickets and make more money in the process. It was Robert Crandall, the former chairman and the CEO of American Airlines, who used this system for the first time at the end of the 70’s.
Yield management, in fact, is a system that was invented to manage all aspects of revenue for an airline, including ticket sales, reservations, airline seat availability, and pricing. It’s used by airlines to maximize the volumes of sales by selling more seats on planes at higher prices while maintaining a full flight schedule.
So, Airlines and hotels have one single thing in common – they sell a fixed time-limited inventory. One problem associated with fixed resources, such as hotels, is that a permanently fixed price all year round will not come in handy if your goals are to maximize revenue. Furthermore, the customer landscape of the hospitality industry has drastically changed over the past decade, as seasonal opportunities such as holidays, events, and trends come and go in a flash. So how can you leverage such opportunities to obtain last-minute bookings and take last-minute, efficient strategic decisions? Having a well-defined yield management strategy – a key pricing strategy that will help you maximize revenue.
Here, we explore in-depth what yield management in a hotel is, and the associated benefits. But first, let’s examine the basics!
Put simply, the definition of yield management in a hotel is a pricing strategy that entails selling the right room to the right customer at the right time and at the right price. Don’t be overwhelmed by the definition. It simply means that as a hotelier – essentially a seller – you can sell a single room to different people at the right time. Obviously, at different rates depending on opportunities, demand, season, occupancy rate, competitor price and a lot of other factors, like perishable inventory and a range of external factors linked to your accommodation, that you and only you could know.
Our property management system allows you to allocate rooms and access guest details all from a single dashboard, relieving you of planning-related stress.