Revenue management or Yield management are identical terms used to generate higher revenue. Good revenue management results in offering the maximum price at all times.
Gepubliceerd op 28-05-2020
Revenue management or Yield management are terms often used interchangeably to mean the same thing. It’s about determining the best price that is dynamically compiled based on circumstances. By applying price elasticity, the highest possible price can be requested at any time to maximize revenue.
This form of pricing has long been widely used in aviation, where a flight ticket for today can have significantly different pricing than a ticket for the same destination tomorrow. Everything is calculated based on expected supply and demand.
Not only in aviation, but increasingly and nearly as commonplace is the use of revenue management in hotels. Other sectors and industries have also started to try out the success of dynamic pricing. A day at an amusement park, for instance, is cheaper on a calm day to spread visitors. Traditionally, hotels used to apply only two rates (high and low season), but now can vary this daily based on circumstances.
Revenue management is applicable for all hotels, including small hotels. Even apartments, vacation homes, and bed and breakfasts can benefit from it. It can lead to a better occupancy rate and better revenue.
A few reasons to avoid using revenue management:
Gradually increasing prices is one of the most commonly used applications, which sometimes occurs without even referring to revenue management. Early-bird offers are essentially an example of this. As time progresses and available rooms become scarcer, the price will gradually increase to achieve maximum occupancy and revenue.
As a company with roots in Nijmegen, we help nationwide but of course also hotels and bed and breakfasts in our vicinity. The 4Daagse is the largest annual event in the Netherlands. Typically, by March, all accommodations in the area are usually fully booked for the 4Daagse the following July. We can say that demand during the 4Daagse week is substantial, and it’s crucial to raise accommodation prices significantly. Typically, the accommodation gets filled up anyway.
Such small adjustments in rates already form a basis of revenue management from which you can make a significant leap in revenue. This can be done easily and without the need for a revenue management system.
Revenue management can consider numerous circumstances:
With a revenue management system, patterns can be recognized whereby the system determines the price of room stays. It’s also possible to exert influence and apply rules. Moreover, revenue management can also be applied by manually adjusting prices without a system.
MyTourist offers the opportunity to link one of the available systems to your hotel account. Price determination takes place externally and is then synchronized in two ways with MyTourist.