The Basics of Yield Management

By. Sherri Kimes 13th Nov 1989

Book Discription

Yield management or revenue management is the process of allocating the right capacity to the right customer at the right time at the right price in order to maximise revenue or yield. Within the context of operational research, it is the process of matching probabilistic demand to a set of finite resources in a manner that will optimise profit. The application of yield management has been described in a vast variety of service industries, including hotels, tourism and transport. These industries have similar characteristics i.e. constrained capacity and a perishable product. Operational research has made a significant contribution to the development of yield management systems by providing mathematical tools and modelling mechanism’s. The purpose of this chapter, is to provide the reader with an introduction to the ‘fundamentals of yield management’.

Yield-management systems have boosted revenue at many properties, but these electronic tools are not always compatible with the operating atmosphere of a hotel. If you want to introduce yield management at your property, you may need to make some changes first.

Yield management is a pricing and revenue management strategy that is used to maximise business performance. It involves adjusting prices based on predicted demand and other external factors to maximise revenue or yield. The main goal is to sell the right product to the right customer at the right time for the right price.

For hotels, the ultimate aim of yield management is to increase revenue by leveraging the balance between supply (available rooms) and demand (guest bookings). By understanding and anticipating guest behaviour and market dynamics, hotels can optimise their pricing strategies to boost their bottom line.

About The Author

About Sherri Kimes

Professor Kimes  Is considered to be one of the top thought-leaders and experts in Revenue Management in the world. She has been working in Revenue Management since 1988 and has had the privilege of helping to educate some of the top leaders in Revenue Management. She frequently engages with corporate, government, education, advisory, legal, and private equity

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