Hotel consultant

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  • Publié le : 6 août 2010
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Aperçu du document
1. Introduction 3
2. Revenue Management 5
3. Need for Yield Management 6
4. Inventory Allocation 7
5. Volume Relationships 9
6. Conclusion 11
Yield Management Page 3

A hotel is an establishment that provides paid lodging on a short-term basis. The provision of basic accommodation, in times past, consisting only of a room with a bed, a cupboard, a small table anda washstand has largely been replaced by rooms with modern facilities, including en-suite bathrooms and air conditioning or climate control. Additional common features found in hotel rooms are a telephone, an alarm clock, a television, and Internet connectivity; snack foods and drinks may be supplied in a mini-bar, and facilities for making hot drinks. Larger hotels may provide a number ofadditional guest facilities such as a restaurant, a swimming pool or childcare, and have conference and social function services.

Hotel revenue break down:

Revenue breakdown for full service hotels:

Cost & expense breakdown for full service hotels:

Revenue management:

It is an art & science of predicting real time customer demand to
determine the optimal price & availability of a product.Or in laymen terms we can say selling the right product to the right customer at the right time at
a right price thereby maximizing the overall revenue.

In hotel industry yield management is done by the rates the hotel will charge & the no. of
rooms available for each rate based on projected occupancies for a fixed period.

This pricing is based on the elasticity of demand for selectedcustomer segments.

Yield = (room night sold x actual avg. room rate)

(roomnights available x room rate potential)

Take a look at hotel functions:

Director of market/revenue strategy

Yield Management

Page 4

Inventory management

group strategy/ business evaluation

Revenue analysis

Property sales & event management- sales & implementation

Therefore we maximizerevenue in hotel by:

Pricing: how to price their product

Inventory allocation: what we put on shelves

Selling strategy: how to sell the product

Requirements of yield management:

Good data

Ability to segment markets

Perishable inventory

Ability to sell in advance

Low marginal sales cost

Booking pattern data

Excellent management information system(MIS)
•Customized software’s & system like oracle, Fidelio

Ability to fence customer segments

An overbooking policy

Yield Management

Page 5

It is a process of determine how each product will be defined in market place.
Now in order to develop rational pricing we have to look upon these factors.

Who are my customers?

What are they buying?

What arethey willing to pay for the quality offered?

How do they book the room?

What is the quality of my product?

What economic return is desired?

What are my past pricing actions and results of those actions?

What are my roomnights, rate, and mix trends by segments?

What is the state of the economy?

What is the market outlook?

What is demand strength,It’s pattern & it’s consistency?

What my competitors are doing & what will be there reaction?

Inventory allocation:

Yield Management

Page 6

It is a process to determine how much to make available at each price point
of product.
To make efficient allocation a hotelier tries to find out:

How much business is there?

When do customers book & how much/

How much they are willingto pay
Accordingly a strategy is prepared in order to manage demand at 3 levels:
Level 1 :0%-75% occupancy
Level 2 : 76%-80% occupancy
Level 3 : 80%-100% occupancy
Level 1 strategy:

Focus on volume.

Level 2 strategy:

Focus on mix rate & volume

Hotel requalifies special corporate discounts

Limiting discounts in peak time

Level 3 strategy

Focus on rate

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