Yield Management in the Hospitality Industry

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This research is targeted at providing answers to three questions. We can review the capacity in which the research managed to address these questions. In a bid to perform the task, this section will compare questions and findings of the research. The following are research questions that this research was seeking to answer.

  1. How do business administrators in Saudi hotels manage room revenue in their daily work?
  2. Are these managers fully aware of using YM?
  3. How is YM used as a tool for maximizing room revenue by hoteliers in Saudi Arabia?

The first question was seeking to understand the strategies in which administrators managed room revenue in Saudi hotels. The results of this research have indicated multidimensional responses to this question. Managers considered several aspects when managing room prices. These aspects will be discussed in terms of location, occupancy and room rate, pricing strategies, price adjustment strategies, segmentation, human resources, customer management, and third-party websites.

The findings of this research proved that location leads to variation in room prices. It had been pointed out by other researchers that accessibility influences the demand of a hotel (Egan and Nield, 2000; Weaver, 1993; Taylor, 1995; Bateman and Ashworth, 1981). For instance, hotels at the city center could manage to charge higher rates than those located far from the city center. Concurrently, low demand of the hotels located far away managed their room revenues by lowering their charges. Lowering of their room rates allowed the customers to prefer low charges which in turn led to high revenues from other services offered in the hotel. In this case, demand was the factor that determined how low or high the prices of rooms were set.

Room revenues were, also, managed by regulating the occupancy. For instance, it has been stated that occupancy was a key reliance for hotels that did not have high demand. They hand to lower their prices to accommodate many customers. When the demand for hotels rose to 100%, the prices were at their highest since there was no need to pay a lot of attention to occupancy. At this point, the administrators took the advantage of raising their prices to the maximum. Also, the hotels that did not have many customers had the fervency to request customers from other hotels. This assisted to improve room rates and occupancy.

Pricing determines revenues that hotels achieve from the rooms. Too high a rating could have resulted in rejection from the customers. On the other hand, if the room rates were reduced to levels that were too low, the hotel was prone to losses. They would fail to apply YM strategies that emphasize income maximization. The techniques of pricing, such as discounting, played vital roles in customer satisfaction. Evaluating the willingness of customers to pay higher prices was, also, a crucial aspect of this research. Higher payments lead to improvements in room revenues that are recommended by YM.

Segmentation was an unexceptional factor to accommodate all customers within their willingness and capacity to pay. This enables hotels to identify the routes that could be followed to satisfy customers’ abilities to pay. It allowed the accommodation of VIP customers who could prefer to pay more for staying in a state classroom with additional services.

This research has identified that customers’ satisfaction was a key factor determining whether customers will return to a hotel. Consequently, the research identified that managers regulate employees and receive customers’ feedback to evaluate the quality of services they offered. Ensuring customer satisfaction determined whether a customer can prefer a hotel in the future. Consequently, managing customers had potential influences on the room revenues. The question under review had been addressed through this factor.

Lastly, it was stated that room revenues were highly affected by third-party websites. Some competitions led to the cold war of prices and deterioration of YM recommendations suggesting high income. Also, the costs undertaken by these websites lead to an increment of room rates and/or fewer revenues. However, almost all hotels applied these websites in their operations. They could not have assumed the application of these websites due to the competition that had risen. The few that did not apply these strategies were identified as incompetent because they could not be seen by customers during booking.

Regarding the second question of this research, it was identified that managers possessed at least some knowledge about YM. However, we could not confirm that all managers were fully aware of yield management. There were reports that some managers defied the rules of yield management. In this section, it is vital to evaluate the aspects that marked awareness of YM and unawareness or deviations from YM.

The findings of this research approved that managers had some knowledge about yield management. Some were fully educated in universities where they took courses in yield management. Others had a chance to attend seminars and read articles about yield management. Even those who did not have any of these studies had experienced YM from the work they do as managers. Although we can flatly state that managers were not fully aware of YM, we cannot afford to state that customers did not have some knowledge about YM. They were able to apply YM techniques in their managerial approaches. However, some hotel managers were not able to apply to YM. They deviated from YM approaches to achieve some aspects that were not given to YM. I will cite some of the factors that depicted YM application and lack of YM application to support these allegations.

The most basic aspect of YM management is to ensure that the revenues of a hotel are maximized. The findings of this research proved that some hotels set their prices by the revenues they targeted to achieve. They did not allow influences arising from other places to influence their decisions. For instance, a five-star hotel manager had stated that room revenues were the most fundamental aspect of their concern. The findings, also, pointed out that low occupancies at high prices were better than high occupancies and low prices. These managers argued that they would not allocate a lot of funds when maintaining a few people as compared to maintaining many people.

On the other hand, it is apparent that some managers either ignored the application of YM or had insufficient application techniques. It was clear that some hotels were offering much than was necessary. For instance, managers complained that some hotels had offered to give free days of stay for the customers who booked in their hotel. This defied the application of yield management by choosing to reduce the revenues achieved from rooms. Proper application of yield management recommended that managers should make offers removing value to their services. These managers were supposed to make other offers that were outside those services that the customers pay. For instance, proper application of yield management could consider offering discounts or offering points. It can, therefore, be concluded that the application of yield management was not applied fully by the managers due to a lack of comprehensive skills.

The last question was seeking to understand how YM participated in the maximization of room revenues. YM has played a critical role in the maximization of revenue. In a bid to show this, the following paragraphs have described some of the strategies in which YM has participated to ensure revenue maximization.

YM allows businesses to evaluate the conditions surrounding business proceedings. The hotels being studied are surrounded by some factors that include location, and customer satisfaction among others. It is identifiable that elasticity of demand was considered in room rates. For instance, low seasons led to low prices while high seasons led to rises in room rates. This depicted the proper application of YM where demand determines the prices. It was, also, clear that hotels located at the periphery considered lowering their prices in response to the low demand. Some considered applying YM techniques such as providing transport and offering quality services to enable room revenue maximization.

Another strategy of YM depicted in the findings is segmentation. This strategy allowed the customer to choose rooms by the allotted prices and services. This ensures that only a few customers are turned away because they could not afford to pay the prices. It is, also, worth mentioning that this technique provided solutions to conflicts related to price differences.

We cannot assume the significance of customers’ willingness to pay. Some managers allowed front office employees to choose among several prices. They, also, gave them the mandate of bargaining and giving discounts to customers by their willingness. This is a fundamental step that allows the employees to weigh what a customer could afford to pay. In some cases, the customer could be willing to pay more. In other cases, a customer could have an amount that differs slightly from the marked prices. In the first case, the employees will facilitate entry of higher income to the hotel. The customer will be allowed to book at a lower cost instead of terminating the transaction. The two cases allow the hotel to avoid losses of income.

When the occupancy of hotels reached about 100%, most hotels canceled the bookings made by corporations. Also, some hotels applied overbooking carefully to ensure that the maximum possible income was reached. This is the application of YM in achieving the highest possible income from room revenues. Also, rules were set to regulate cancellations and ensure that hotels did not suffer consequential losses. However, this strategy was determined to possess some characteristics that could significantly affect revenues earned. Therefore, some hotels chose to avoid overbooking because it could lead to customers’ dissatisfaction and losses associated with finding another hotel for the customer.

Research must follow the questions that it seeks to answer. If research does not address the questions that resulted in the study, it could be determined as unidirectional. When a person performs such research, it fails to make sense to the target population. This research has, therefore, addressed the questions with utmost concern. It has coherent relationships to the questions under study.

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BusinessEssay. (2022) 'Yield Management in the Hospitality Industry'. 14 December.


BusinessEssay. 2022. "Yield Management in the Hospitality Industry." December 14, 2022. https://business-essay.com/yield-management-in-the-hospitality-industry/.

1. BusinessEssay. "Yield Management in the Hospitality Industry." December 14, 2022. https://business-essay.com/yield-management-in-the-hospitality-industry/.


BusinessEssay. "Yield Management in the Hospitality Industry." December 14, 2022. https://business-essay.com/yield-management-in-the-hospitality-industry/.