Hotel Managemennt

Revenue Management

To know how the hotel industry uses the tools yield management and revenue management today’s hoteliers must understand the relationship between the two tools and how each part of revenue management feeds into a network that supports the goals of yield management. The goal for yield management maximizes room revenue, but using yield management with revenue management the profits are higher for the hotel. The difference for the higher profits is the applications of both tools today are interchangeable, however in particular yield management affects the plans for achieving the maximum goals for room rates and revenue management affects the plans for achieving the maximum goals for the most profitable guests (Bardi, 2007, p. 170).
Yield management and revenue management programs use computerized systems that keep a company’s history to predict future demands such as arrival dates, rates, room types, and length of stay. Using these systems the front office manager can evaluative room rate categories, room inventory, and group buying power to build additional income for the hotel. These computer system applications support the goals of the hotel management staff for achieving the highest   percentage of income that can be secured if 100% of available rooms are sold at their full rack rate using the formula(Bardi, 2007, p. 172);
Yield = Revenue Realized (number of rooms sold x ADR)
  Revenue Potential (number of rooms available x rack rate)
Accurate daily forecasting that allows setting revenue management strategies increases profits especially through the food and beverage income. For example, one hotel may have 350 rooms at a $110 rate making the room income of $38,500, a food and beverage income of $18,750 making the projected income $57,250. Another hotel may have 300 rooms at a $100 rate making the room income $30,000 with a food and beverage income of $62, 500 and a projection of income of $92,500. In both hotels the result of revenue...