The document discusses revenue management (RM) in the hotel industry, focusing on strategies to maximize profits while managing room sales and occupancy. Key tactics include price adjustments based on demand, forecasting, and controlling discounts, along with the importance of selling the right product to the right customer at the right time. The role of the team members is emphasized for effective decision-making and assessing the impact of RM strategies.

1. Unit 1

2.  Yield Means to produce or give forth an output or
return. YM is output management.
 YM/ RM is the process by which the sales of a
limited quantity of goods are managed in order to
maximize profits..
 In terms to accommodation, the term means the
management of revenue generation from rooms.
 It is the yardstick of performance of the
establishment in terms of achieving maximum
occupancy i.e full house at optimum revenue
generation .

3.  Price the product (rooms) appropriately based
on seasonality (changes in customer mix,
demand, etc.)
 Focus on forecasted demand for the rooms and
develop restriction and authorization
strategies that will capture the highest possible
revenue from that demand.
 Implement selling strategies that make sense
to the customer, support the brand’s selling
philosophies, and maximize the property’s
revenue.

4.  An economic concept posited by Dr. Matt H Keller,
and first used by the airlines industry beginning in
the 1970s.
 Concept is applicable, where the reservation are
taken for a perishable commodity.
 Key to successful RM for the hotels is to sell the
right product to the right customer on the right
day for the right price.
 It is based on the supply and demand.
 The hotel’s industry focus is shifting from high
volume bookings to high profits bookings.

5.  Improved forecasting
 Improved Seasonal pricing and inventory decisions
 Increased business profits
 Saving in labor costs and benefits
 Determination of discounting activity
 Enhanced the coordination between front office and
sales.
 Improved development of short term and long term
business plans.

6. Tools of Revenue
Management
How we Control
and Limit the
room supply
How we sell
our product
How we protect
sufficient space
for longer stays
MAXIMIZING REVENUE
Capacity
Management
Discount
Allocation
Duration
Control
Copyright. Eugene Win CRDE 2009

7. 1. Also called as selective over booking.
2. It involves controlling and limiting room supply.
3. It balances risk of overselling against loss in
potential revenue arising from SPOILAGE- rooms
going unoccupied after reservations were closed
off.
4. Also involves number of walk-ins to accept in
place of expected cancellations and no shows.
5. It varies with room type; it being more prudent
to overbook lower priced rooms.

8.  1. Involves restricting the time period and the product
mix available at reduced prices.
2. Primary objective is to protect enough remaining
rooms at a higher rate to satisfy the projected demand at
that rate while at the same time filling up rooms that
would otherwise have remained unsold.
3. Works on the principle that sale of a perishable item
at a reduced price is often better than no sale at all.
4. Limiting discounts also encourages up selling.
5. PRICE ELASTICITY refers to relationship between
price and demand that needs to be carefully considered

9. 1. This places time constraints on accepting
reservations in order to protect sufficient space for
multi day requests.
2. A reservation for one night stay may be rejected
even though space is available.
3. Hotels in peak occupancy should prefer
reservations to be for more than one night.

10. 1. Group Room Sales
2. Transient (FIT) Room Sales
3. Food and Beverage Activity
4. Local and Area-wide Conventions
5. Special Events

11.  GROUP ROOM SALES:
1. Group Booking Data
2. Group Booking Pace
3. Booking Lead Time
4. Displacement of Transient Business
5. Series Groups
2. Transient Room Sale:
To enhance FIT room Business.
To get the maximum ADR
To don the maximum occupancy rate.

12.  3. Food and beverage Activity:
To generate the maximum F& B revenue from the in
house guest.
4. Local And area Wide Activity:
To generate the maximum occupancy at the higher
ARR during any local events.
5. Special events
Hotel may be able to take advantage of special events
to be held in or near to the hotel by restricting room
rate discounts or requiring a minimum length of
stay.

13.  Close or Restrict Discounts
 Apply Minimum length of stay restrictions carefully
 Reduce group room allocations
 Reduce or eliminate 6PM holds.
 Tighten guarantee and cancellation policies
 Raise rates to be consistent with competitors
 Consider a rate raise for packages
 Apply full price to suites and executive rooms
 Apply deposits and guarantees to the last night of
stay

14.  Sell value and benefits
 Offer packages
 Keep discount categories open
 Encourage upgrades
 Offer stay sensitive price incentives
 Remove stay restrictions
 Involve your staff
 Lower rates
 Establishing relationships with competitors.

15.  Potential Avg. Single Rate :
Single R Rev @ Rack Rate/ No. of Rooms Sold as singles
2. Potential Avg. Double Rate:
Double r rev @ Rack Rate/ No. of rooms Sold as doubles
3. Rate Spread: PADR- PASR
4. Multiple Occupancy Percentage:
Rooms on Multiple Occupancy *100/ Rooms Occupied
5. Potential Avg. Rate: (M Occ % * Rate Spread)+ PASR

16. 6. Room Rate Achievement factor:
Actual Avg. Rate/ Potential Avg. Rate
7. Yield Statistic:
a. Yield = Actual R Rev/ Pot. R Rev.
b. Yield= R Nights Sold/ R Nights ava* Act ARR/ Pot
Avg. Rate
c. Yield= Occ % * Achievement Factor

17.  There are four tactics that must be Applied Cautiously:
1. Hurdle rate: In the context of revenue management,
the lowest acceptable room rate for a given date.
2. Minimum Length of stay: A RM availability strategy
requiring that a reservation must be for at least a
specified no. of nights in 0rder to be accepted.
3. Close to arrival: It allows reservation to be taken for a
certain date as long as the guest arrives before that
date.
4. Self Through: It works like a minimum length of stay
requirement, except that the length of the required
stay can begin before the date the strategy is applied.

18.  Data Collection
 Decision Making
 Analysis
 Update and monitoring
 Reports Produced

19.  The role of the team is primarily to predict the
demand of rooms and to access whether to take
transient or groups, or displace transient in
preference to groups, etc.
 The major members are FOM, Reservation
manager, Sales Manager.
 It is important for the team to have feedback
sessions so as to assess whether the decisions taken
with respect to revenue and occupancy
management and strategies are effective or not.