The yield management of hotels is the technique
allocates the right type
of room to the right guest at the right price so as to maximize
the profitability. It is the process of understanding, anticipating and
influencing consumer behaviors by studying the past information.
1. Price
Discrimination
Hotels can use the price discrimination to enhance
their profit by separate the customer into different groups based on their
needs and price sensitivity. For the price sensitive customers who are only
willing to pay in low price, the hotel can set some limitation for them for
example they need to pay a higher percentage for advance booking. Also, they
won’t have the deposit refund. And for some busy or popular period, they won’t
have advance booking service which they are only allow booking in a certain
period.
2. Overbooking
Overbooking means the reservations are more and exceed
the company rooms capacity to serve the customers.
By the method, the hotel can ensure all rooms with
full occupancy and capture as much profit as possible. Since with overbooking,
hotel can choose the customer with higher consumption ability or good
reservation record in order to maximum each room’s revenue.
However, overbooking have a risky drawback which is the hotel will lose some trust for the customer by breaking the promise they have made because they have to cancel those overbooking rooms. Also, the hotel will encounter a negative and bad word of mouth. But after considered all the drawback of overbooking, if the hotel still adopt this strategy which mean the benefit of it is more the drawback.
However, overbooking have a risky drawback which is the hotel will lose some trust for the customer by breaking the promise they have made because they have to cancel those overbooking rooms. Also, the hotel will encounter a negative and bad word of mouth. But after considered all the drawback of overbooking, if the hotel still adopt this strategy which mean the benefit of it is more the drawback.
3. Inventory control
Inventory control is for hotel is to decrease the discounted rooms in order
to maximum the profit. Hotels need to keep more rooms for customers who are
willing to pay for a higher rent to capture more revenue.
Customers always ask for discount while they book the hotels in advance. However, if the hotels hold all the rooms for reservation then they won’t have rooms to sale to the walk in customers at a higher price. Therefore, hotels should keep limited specified percentage of rooms for reservation guest not only to earn higher profit but also for it own guarantee because of the no show.
Customers always ask for discount while they book the hotels in advance. However, if the hotels hold all the rooms for reservation then they won’t have rooms to sale to the walk in customers at a higher price. Therefore, hotels should keep limited specified percentage of rooms for reservation guest not only to earn higher profit but also for it own guarantee because of the no show.
Reference:
http://www.investorwords.com/8736/yield_management.html
http://zh.scribd.com/doc/19568018/Yield-Management-in-Hotel-Industry
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