The importance of yield management in the hotel industry

The concept of yield management may seem complex but you must understand it if you work in the hotel industry. By definition, yield management, also known as revenue management, is a pricing strategy that consists of using variables to optimize a hotel’s occupancy rate, revenue and margins. Thus, by playing with various combinations of price and occupancy variables using a differentiated and dynamic pricing policy, you also increase your REVPAR (revenue per available room). Yield management is based on a simple principle: maximize the occupancy of your establishment by striking the right balance between revenue and profitability, based on the observation that an unsold room today is a lost room.

Your main priority is to maximize your profitability

 To do this, you can use yield management by analyzing your data (occupancy rates, sales, types of clientele) from the current year and the previous year and adjusting your rates. This analysis can be performed by specialized software that can also facilitate decision making or speed up the decision. Yield management is primarily based on supply and demand forecasts. When demand is higher than supply, it is appropriate to offer higher prices in order to maximize your profitability. On the other hand, when demand is too low, it is advisable to lower your prices to avoid low occupancy. You must also take into account several factors such as seasonality, weather, holidays, events, length of stay, packages and services, and offers available at your competitors.

With these forecasts, you will be able to adjust your prices at the right time, better manage your room inventory while determining your booking limit and define pricing strategies and promotional offers relevant to your clientele. In addition, yield management systems are connected to your Property Management Cloud and distribution channels so that your hotel’s availability and inventory are updated in real time.

It is also important to know these performance indicators when using yield management software:
– The occupancy rate
ADR (Average Daily Rate) 
REVPAR (Revenue Per Available Room) 
NREVPAR (Net Rooms Revenue Per Available Room) – GOPPAR (Gross Operating Profit Per Available Room)


Using yield management techniques could be very beneficial for your hotel as it would help you to increase your revenue and margins by selling the right product or service, to the right customer, at the right time.

The way in which yield management stimulates demand is mainly based on predictions and on the flexibility of rates (including the variation of prices). It is a particularly relevant strategy if your hotel has several distribution channels and if you wish to improve the segmentation of your clientele.

Some articles that might interest you

augmenter-reservations-hote
12 May, 2016 | Claudine Vio

9 Ways to Boost Hotel Bookings and Increase Revenue

Tip 1: Solidify your hotel guest personas With the help of your hotel database, find out who your…
Read the article
raisons-creer-questionnaire-satisfaction
28 June, 2016 | Nicolas Audiffren

8 great reasons to create a customer satisfaction survey

To make sure the service you offer matches your customers’ needs/expectations Where striving for quality is concerned, the…
Read the article
conseils-marketing-digital-hotel
25 August, 2016 | Nicolas Audiffren

10 Digital Marketing Tips to Differentiate Your Hotel

1 - Embrace your specialization Your hotel should appear in the distribution channels most relevant to your market…
Read the article
personnel-hotelier-productif
24 January, 2017 | Sarah Trépanier

5 tips to make your hotel staff more productive

Give incentives to work harder One of the first things you can do to encourage your hotel team…
Read the article
17-01-conseils-ameliorer-service-clientele-00
26 January, 2017 | Catherine Daoust

6 tips to improve your customer service skills today

1. Engage with your target audience The customer service’s goal is to offer a positive experience to your…
Read the article
personnel-heureux-hotellerie
| Catherine Daoust

4 ways to keep your hospitality staff happy

1 - Establish a working culture of learning and development The nature of the hospitality industry is that…
Read the article
formations-hotellerie
3 April, 2017 | Sarah Trépanier

Why is it beneficial for hoteliers to train their staff?

1 - Boost their performance Investing in training isn’t done simply for the employee’s benefit — it can…
Read the article
cybersecurite-hotel-pms
23 May, 2017 | Karine Thibeault

Hotel management software: what about cybersecurity?

Physical security Should your establishment suffer damage from a fire or water infiltration, it would be unfortunate to…
Read the article
augmenter-reservations-directes
12 July, 2017 | Nicolas Audiffren

8 easy steps to boost direct bookings

Augmentez vos réservations directes en 8 étapes faciles 1. Make the reservation process easy To encourage people who…
Read the article
qualites-moteur-reservation
3 August, 2017 | Claudine Vio

4 booking engine attributes that boost conversions

User-friendly and intuitive The easier and more intuitive the booking experience, the more likely conversions will result. Therefore,…
Read the article
programme-fidelisation-hotellerie
7 February, 2018 | Sarah Trépanier

Everything you need to know about loyalty programs

Reasons for a loyalty program Loyalty programs are well known for creating a win-win situation: Guests get rewarded…
Read the article
attract-business-travelers
7 March, 2018 | Sarah Trépanier

How to attract business travellers

Technology is essential C’est simple, pour inciter les voyageurs d’affaires à séjourner dans votre établissement, celui-ci doit être…
Read the article
qualites-bon-pms-hotel
24 April, 2018 | Karine Thibeault

6 Qualities of a Good PMS

Les 6 qualités d'un bons PMS hôtel A good PMS must: Be easy to use Your PMS must…
Read the article
automatisation-hotel
15 May, 2018 | Claudine Vio

Let automation lead the way

Laissez-vous guider par l'automatisation The booking process Automation begins with booking. When booking is done online, the booking…
Read the article
connectivite-pms
21 June, 2018 | Karine Thibeault

With PMS integration, you have the luxury of choice

Why is integration capability important? An establishment’s hotel management system (PMS) lies at the heart of its operations. While…
Read the article
maximiser-logiciel-hotelier
26 June, 2018 | Karine Thibeault

5 tips to maximize your property management software

1. Training: getting to know your PMS When implementing or changing your hotel management system, proper training is key. As…
Read the article