Home Revenue Management Golf 5 tips to determine if yield management is right for you

5 tips to determine if yield management is right for you

Mar 4, 2012  By 

Excerpt from, “Yield Management, Is it Right for You?” by Andy Seitz from NGCOA Connect Magazine

When you hear the term “yield management,” it refers to a strategy that prioritizes revenue per available tee times throughout the day. In other words, it makes golf available to the right player at the right price and right time. Is yield management a strategy you should employ at your facility? Here are five tips that can help you answer that question:

  1. Optimize pricing to boost revenue.
    It’s unlikely that your course has been charging $50 a round when it could be getting $150. However, using sophisticated pricing and revenue optimization techniques can help you find the best price for your course and often yield a 10 to 20 percent increase in top-line revenue that will go directly to the bottom line.
  2. Identify your demand segments.
    One factor that makes yield management a successful strategy in the travel industry is the difference in demand shown by business and leisure travelers. In golf, this distinction is not always so clear. Most destination resorts can easily distinguish the differences between the demand from those who stay at the resort and local residents. If, however, you operate a course where golfers’ demand doesn’t neatly arrange itself into distinct segments, do not force segmentation. It may be that the only segmentation needed is to differentiate between frequent and infrequent players.
  3. Develop demand forecasts.
    This is the most important and hardest piece of instituting a yield management program. To do it correctly, you need to understand the price sensitivities for your course by player, month, day and even right down to hour. The advent of third-party tee time distributors has helped golf courses develop these forecasts with greater precision. By experimenting with the tee time prices released to those channels, you should begin to see how a change in price affects demand.
  4. Disaggregate your data.
    Make sure you have at least two years’ worth of information to assess. Since most of the U.S. has been in a recession for the last few years, incorporating data from before that time will skew your view of current demand. Then you will need to disaggregate your data. If, for example, you want to examine how to price Tuesday tee times from 9 a.m. to noon in July, don’t lump them all together and average them. A more useful picture emerges when you look at the distribution of the individual data points from those times. For example, knowing you sold 50 percent of those times at $50 is not as useful as knowing that you sold 75 percent at $40 and 25 percent at $80.
  5. Use the right metrics.
    Measuring the effectiveness of your pricing decisions by either average price or average utilization usually doesn’t produce a clear performance picture. The hotel industry uses a measure called RevPAR (revenue per available room), which is derived by dividing total revenue by total available room nights. The golf industry has co-opted this concept and developed RevPATT (revenue per available tee time) as a performance metric. RevPATT is calculated by dividing total revenue by the number of available tee times and is the best metric we’ve found yet for assessing performance.

After reading these five tips, is yield management right for your facility?

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