Professional Application of Yield Management

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The ultimate intention of YM usage has been determined to be revenue increment. YM system was retrieved from airline industries and incorporated by hotel managers to make informed decisions in their businesses. Arguments have been stipulated to relay that YM is partitioned into 3 managerial sections which are price, inventory, and duration of customer use. These partitions should raise revenue. However, it is vital to acknowledge that there are system boundaries such as decrement of guest satisfaction, loss of brain damage, and RevPAR (revenue per available room) decrement in cases of ineffective management of YM.

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The management of occupancy and room rates are interconnected with YM via some managerial strategies, such as occupancy restraints, and inventory management. Exceptionally, the complete application of YM is not fundamental and critical for occupancy management. Occupancy management requires that managers attain an acumen of their products to facilitate the application of strategies potential for best room uses. The expectation of greater revenue is, also, reliant on demand. Consequently, a clear and concise understanding of variant factors of demand about how it is affected and its time of reaction must be known.

Price has consequential effects that enhance variation of demand. Additionally, price variation is delicate due to the repercussions it imposes on customers, leading to demand manipulations in several ways. A market-based pricing strategy is a potential of attaining great revenues. However, making this achievement must involve management that understands demand and competition in the market. Researchers have stipulated that the cost-based model is weak when setting the room rates of a hotel. The weakness arises because the model fails to account for market variations and conditions which include competition, price elasticity, and demand. Adoption of proactive managerial strategies is, therefore, critical when regulating demand and supply without deteriorating revenue.

Price adjustment strategies have been identified and highlighted through the understanding of discounts and different segments of the market. Hotel businesses could apply the provision of discounts in their YM proceedings. Discounts increase the yield achieved when demand is low or when the supply is higher than demand. However, setting the discounts should be performed strategically by stating the amount and the time to discount. On the other side, segmentation is a critical factor in increasing revenue returns. This is apparent in price discrimination that fetches more income from the often hotel and/or service center. The basis of segmenting the market entails applauding customers and their requirements with dignity and hospitality. This facilitates the implementation of strategies to satisfy the different needs of customers through different treatment and models of satisfaction that are contrary to competition.

Implementing YM is critically reliant on human resources to facilitate the attainment of positive results. Yeoman (1996) identified that the system of yield management was obsolete without the intervention of human activities. The team operating hand in hand with the employees was a critical part of evaluating the activity of humans. Similarly, Daigle and Richard (2000) relate the activities of humans and their approach to the YM system. Also, Hendler and Hendler (2004) identified the relationship that depicts successful expertise in the use of YM software to managers and employees. Consequently, employees and managers ought to be encouraged, trained, and motivated to strive for the successful establishment of YM in hotel businesses.

Usage of the YM management program to differentiate the inventory and availability of prices to customers lead to conflicts. These conflicts deteriorate the long-term goals of an organization. The conflicts are bound to occur when an organization imposes discriminatory prices, demand-based pricing, and off-peak pricing by customers’ abilities to pay. However, some strategies have been identified by scholars to solve these conflicts. These strategies include fenced pricing, price bundling, categorizing, use of availability policies highly published prices properly defined recovery programs, and spatially segregate customers. In the hotel industry, YM relies on selling rooms and delivering other services to the customers. Performing these tasks requires the right timing and setting affordable (considerate) rates. In this case, ‘right’ will refers to the essence of hoteliers’ yield maximization and maximization of guests’ value (Choi & Miles, 2000). According to stipulations made by some authors, websites play a critical part in selling rooms of hotels (Toh, Delay, and Raven, 2011). However, third-party websites, such as Expedia, Travelocity, and Orbitz, have influenced the target of YM due to their high commissions (Toh, Delay, and Raven, 2011). Additionally, the websites present the lowest prices as the best options of the websites. Consequently, revenue managers must pay attention to the risk associated with the websites and the room rates efficacy.

Generally, effective and proper implementation of YM techniques defines the failure and success of a hotel. The manager must, therefore, develop the acumen to deliver services and interact with employees adequately in a bid to achieve this. The professional application of YM has the potential the raise the revenue of a hotel. Otherwise, the unprofessional application of YM could disintegrate the overall production and terminate the goals of the hotel. It is, therefore, necessary to take caution in this consideration.

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BusinessEssay. (2022, May 4). Professional Application of Yield Management. Retrieved from https://business-essay.com/professional-application-of-yield-management/

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