YIELD MANAGEMENT

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YIELD MANAGEMENT

• Co-Sponsored by
• BERRY, DUNN, McNEIL PARKER
• and the
• MAINE INNKEEPERS
• ASSOCIATION

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YIELD MANAGEMENT TRIAL AND ERROR

• Those who try to do something and fail are
  infinitely better than those who try to do
  nothing and succeed."
• -Lloyd Jones

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INTRODUCTION

• Revenue Management Defined-
• Maximizing Profits from the sale of all goods and
  services offered by the Hotel
• Yield Management Vs. Revenue Management
• Focus on Room Sales through strategic Price and
  Inventory control during the reservation process

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ORGANIZATIONAL GOALS

• Setting Goals and Objectives
• Creating a Property Vision
• Establishing a Sales Orientated Culture
• Yield Formula - Actual Rev./Potential Rev.
• Revenue Management Procedures
• Active Management Participation
• Regular Revenue Meetings
• Experimentation

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THE YIELD MANAGEMENT PROCESS

• Research
• Forecasting Unconstrained Demand
• Target Potential High Return Periods
• Tools to Control Incoming Reservations
• Monitoring and Feedback Systems
• Adjustments to Original Plan

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RESEARCH

• Historic Trends
• Define Market Segments
• Evaluate Demand by Market Segment
• Utilize Historic Booking Practice Data
• Tracking Regrets and Denials
• Competition
• Changes to the Marketplace
• New Rooms
• Renovations - Upgrades
• Property Closings

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RESEARCH (cont.)

• Pricing Patterns
• Market Leader
• Mid Market
• Economy Segment
• Special Event Pricing
• Market Trends
• Overall Demand Patterns
• Weekends ?? ??
• Midweek ?? ??
• New Activity Patterns

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RESEARCH (cont.)

• Special Events
• Analyze Area Events Calendar
• School Vacation Schedules
• Holiday Day of Week Patterns
• 4th of July, Christmas, Columbus Day, etc.

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FORECASTING UNCONSTRAINED DEMAND

• Unconstrained Demand
• Number of Rooms that have been Sold
• Number of Rooms that can be Sold
• - No Shows and Cxl. Reservations

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SAMPLE DEMAND CHART
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TARGET POTENTIAL HIGH YIELD PERIODS

• Unconstrained Demand is Greater than Supply
• Strong Historic Trend Information
• Current Year Event Calendar Information
• Successful (or Budgeted) Marketing Efforts

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TOOLS TO CONTROL RESERVATIONS

• Stay Pattern Controls
• Minimum Night Requirements - 2 or 3 night
• Long term stay discount - 5 or more nights
• Closed to Arrival - No Saturday Arrival
• Inventory Limitations
• Smaller Lower Priced Rooms Closed (sold out)
• View Feature Rooms Closed (sold out)

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TOOLS TO CONTROL RESERVATIONS (cont.)

• Controlling Price - Use Rate Categories!
• Stratosphere - Absolute Peak Demand Periods
• Atmosphere - High Season Rates
• Sky-Shoulder Season Weekend
• Earth- Shoulder Season Mid-Week
• Lowest Possible Profitable Price

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GROUP BUSINESS

• The Foundation of the Revenue Structure
• Blocking Policies and Requirements
• Checking Group History
• Cut Off Dates and Attrition
• Cost/Benefit Analysis

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MONITORING / Feedback System

• Document All Control Restrictions
• Check Reservation Status Continuously
• Create Denial tracking Report
• Why, When, ...Today, This Week, YTD
• Frequent Revenue Meetings with Key Staff
• Compare Actual Occupancy with Original Forecast

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REVENUE MEETINGS

• At least Weekly
• Include all Key Managers and Staff
• Review Previous Weeks Results
• Preview Upcoming 14 Days
• Look Long Term - 30, 60, 90 Days Out
• Discuss any Recent Changes
• Document Decisions
• Training Video - Educational Institute AHLA

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ADJUSTMENTS TO ORIGINAL PLAN

• 90, 60, 30 Day Benchmarks
• Re-project Unconstrained Demand
• Increase or Reduce Controls
• Document all Control Changes

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THE YIELD MANAGEMENT PROCESS (REVIEW)

• Research
• Forecasting Unconstrained Demand
• Target Potential High Yield Periods
• Tools to Control Incoming Reservations
• Monitoring and Feedback Systems
• Adjustments to Original Plan

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YIELD MANAGEMENT AUTOMATION

• Description of Software Function
• Advantages
• Costs

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AUTOMATION (cont.)

• Levels of Computer Systems
• Rule Induction - Rate quotes based upon Fixed
  demand versus forecast. Simple - Easy to use.
• Expert Systems - Rules-based system using
  artificial intelligence to analyze booking
  situation.
• Optimization - Calculates best solution from
  various economic factors. Requires management
  interaction.
• Neural Networks - Programs learn as they go.

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YIELD MANAGEMENT
Presented byArt Marshall, MPS ?AVA Berry, Dunn,
McNeil Parker 100 Middle StreetPortland, ME
04104207-541-2271amarshall_at_bdmp.com