One of the most important hotel pricing techniques is the yield management, which involves the strategic control of inventory through changing rates. The ability to maximise revenue is one of yield management pricing’s key benefits.
Having said that, any revenue manager is aware that knowing, influencing, and foreseeing consumer behaviour is crucial to optimising revenue.
In essence, timing is everything; offering the right product to the right buyer at the appropriate moment. It’s critical to comprehend how to use yield management software to your advantage because, beyond content visitors, occupancy is one of the hoteliers’ primary priorities.
By utilising automation to its full potential, hotels can transform the way staff members view hospitality. Hotels can guarantee the best possible guest experience while managing income streams by being connected and open to integrations.
Advantages of Yield Management in Hotels
Increase Revenue
Machine learning and advanced data have helped yield management progress over time, transforming how people view hospitality. The fundamental benefit of yield management software is that it enables hotels to improve income even if the hotel is not fully booked, which is significant because revenue is arguably the top priority of hoteliers. Basically, you may maximise the average revenue per available room, each night, as revenue managers and hotel owners, by utilising the demand prediction (known as RevPAR).
Understanding Booking Patterns
Each consumer is built differently. Some make last-minute reservations, while others do so months in advance. With this type of management system, hotels can modify prices in response to booking behaviour if they have a comprehensive grasp of booking patterns. For instance, you may charge higher rates for last-minute reservations and cheaper rates for reservations made well in advance. Just remember to account for fixed costs. Hotels already charge less during off-peak months and more during peak months, but with this variable pricing system, you can change those rates based on when the customer makes a reservation.
Increases Your Value Perception
Consumers are essentially prepared to pay more for scarce items due to perceived value, which is how much they perceive the thing to be worth to them. Consumers are more likely to spend more during peak season since the perceived value is higher. The same idea holds true for the hotel sector. By using a variable pricing system, you may increase this perceived value in the eyes of the customers, encouraging them to make earlier reservations and using marketing tactics to support this perception.
Disadvantages of Yield Management in Hotels
Regular Customers Receive no Preferential Treatment
One drawback of yield management pricing is that it doesn’t account for various prices for different persons since prices are dependent on forecasts of booking trends. You face the risk of penalising the “regulars” within differential rates, for instance, if a hotel has a regular client who may be paying the same (or higher price) as someone who booked at the appropriate time for the correct price.
Doesn’t Consider Customer Expectations
Because yield management is dependent on supply and demand, peak season rates will apply to visitors. But those paying exorbitant amounts will evaluate everything in terms of how much their room costs. If there is a component of the visitor experience that falls short of expectations, the hotel runs the risk of receiving unfavourable evaluations.
Yield management software has much more benefits than drawbacks. Of course, it is not a flawless system because there is always a chance for error when relying on automated systems and predictions. As far as we can tell, hotels are unable to foresee the future, but it is becoming significantly simpler with the correct tools. By putting yield management strategies into practice, hotels can improve income with little outlay of resources. Connect with RateGain to obtain all the necessary data and put the ideal plan into action for your hotel.
