Castilleos, Carl Jerald
Presented to Prof. Chuchi Alcoseba
RDIMCON / HIB21 / BS-IHM
What isYield Management ?
■ The process of allocating the right type of
capacity to the right kind of customer at the
right price and at the right time so as to
maximize revenue or yield.
What is aYield?
■ Yield is the Income minus the Expenses and
also called the “Profit Margin”
Where didYield Management originated?
■ “Deregulation” is generally regarded as the “catalyst” for
yield management in the airline industry, to overlook the
role of global distribution systems. In short, it originated
from the Airline Industry.
What doYield Management includes ?
■ Variable Pricing Strategies
■ Inventory Strategies
■ Several aspects of ManagementControl
■ Multidisciplinary Handling Strategies
1.Variable Pricing Strategies
■ Based on understanding, anticipating and
influencing consumer behavior in order to
maximize revenue or profits from a fixed, time-
2. Inventory Strategies
■ Inventory-focused branch of ”Revenue
Management” which involves strategic control of
inventory to sell it to the right customer at the right
time for the right price.
3. Several aspects of Management
■ Including Rate Management, Revenue
Streams Management, and Distribution
4. Multidisciplinary Aspects
■ It blends elements of marketing, operations,
and financial management into a highly
successful new approach.
What are the conditions forYield Management
There are 3 Essential conditions forYield Management to be
1.)That there is a fixed amount of resources available for sale.
2.)That the resources sold are perishable (there is a time limit to
selling the resources, after which they cease to be of value).
3.)That different customers are willing to pay a different price for
using the same amount of resources.
What is the connection ofYield
Management to Revenue Management?
■ As a stated before,Yield Management is an
Inventory-Focused branch of Revenue Management
What is Revenue Management?
■ The essence of this discipline is in understanding
customers' perception of product value and
accurately aligning product prices, placement and
availability with each customer segment.
Essence ofYield Mangement
in the Hotel Industry
■ Hotels use this system in largely the same way, to
calculate the rates, rooms and restrictions on sales in
order to best maximize their return.
■ Yield management teams in the hotel industry have
evolved tremendously over the last 10 years and in
this global economy selling rooms and services at the
right price, at the right time, to the right people.
PROs ofYield Management
■ Wide prices options – gives the feeling to buy or choose
cheaper services for customers
■ Relevant solutions for companies to maximize revenue
■ Increases competitive advantages through utilization of
different price factors
■ Improves sales through price optimization
CONs ofYield Management
■ Sense of unfairness for majority of customers who likes low
constant prices within different periods of time
■ Can create an opportunistic behavior on the part of
■ Perception problems from discounts to service quality
■ Yield Management is a key marketing or pricing tool
for profit maximization in some industries but in some
cases, it can also alienate customers. Nevertheless,
the problem of high fixed costs and inventory makes
filling of aircraft seats and hotel rooms so compelling
thatYield Mangement is essential.