The Problems with Yield Management Software

27th May 2014

NB: This is an article written By : Ben Waldeck

There are a number of yield management software solutions available on the market today. But do they really cut it? Many people say that they don’t. I have spoken to regarding yield management technology. Below are the responses from accommodation providers and the solution to their common dilemmas.

1. Inaccuracy

The major problem with most yield management solutions is that they try to ‘predict’ when there is going to be an influx of bookings by looking at historical data. They lack the ability to see what is happening in the market ‘right now’. This means if there is an event (such as a concert or sporting event) in your local area that you may not have known about, there is simply no way that this yield management software can factor such an event into its calculations. Therefore, you miss out on yielding your rates when demand is high from unforseen events (even in low-seasons).

2. Lack of integration

While most of the yield management solutions integrate into the channel management solutions that multi-national accommodation providers use, they lack the ability to integrate with most Property Management Systems (“PMS”) or Channel Management software solutions that independently owned, or small accommodation chains use.

The lack of integration means that data has to be constantly shuffled from yield management software into channel management software. The lack of integration can mean that it is very time consuming and cumbersome to use.

3. Too Expensive

One of the main issues with traditional yield management software is the cost. Many yield management solutions are in the 10s of thousands of dollars.

Which means that it is out of the budget of most smaller hotels and accommodation providers.

4. Steep Learning Curve

I have spoke to a few people that are experts in using this software – some having over 10 years experience in operating it. One highly reputable Yield Manager that I spoke to told me “You almost need a degree in mathematics to operate it”. The cost together with time it takes to learn and implement, puts it out of the reach of most accommodation providers reach.

So What is the Solution to Effective Yield Management?

While most Channel Management software solutions are just channel managers, Allotz Autopilot is a channel manager that has a real time, integrated Yield Manager built in. This patented technology is worth its weight in gold. Our Yield Manager is able to monitor the amount of bookings that you get, and it will automatically yield your rates and automatically adjust those rates in the Channel Manager. Hands Free.

Allotz Autopilot, as the name suggests, runs on complete autopilot – and it can also be integrated into your PMS – a truly integrated, set and forget system – the first of its kind in the world. The real power of the Yield Manager is that it reacts to the market in real time. The only way to do effective yield management. The best thing is that it costs no more (and often less) than your most channel management software solutions.

Let’s take a look at how Allotz Autopilot’s Yield Manager works with a Quick Scenario:

Let’s say that there is a large sporting event in your area that you are unaware of.

1. Tickets for the event have just been released to the public;

2. Now that ticket holders have secured their tickets, they need to book accommodation;

3. You rate is $150 per night (min 2 nights);

4. There are 5 room bookings from ticket holders in the first 30 minutes of the ticket release;
5 x $150 x2(nights) = $1,500

5. Allotz Autopilot has tracked the demand and increased your room rate by 5% to $157.50;

6. You sell another 5 rooms in the following hour at the increased rate of $157.50;
5 x $157.50 x2(nights) = $1,575

7. Allotz Autopilot has tracked the demand and increased your room rate by a further 5% to $165.50;

8. You sell another 5 rooms in the following hour at the increased rate of $165.50
5 x $165.50 x2(nights) = $1,655;

9. Because of the automatic yielding that Allotz Autopilot has done, you have increased your profit by $75 (first increase) + $155 (second increase) to a total of $230 – without lifting a finger. That is the power of Allotz Autopilot.

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