Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
FIGURE 15
New RevPar index comparison with low-priced sale (300 room nights at $40 
per night).
Hotel
Occupancy Percentage
ADR
RevPar
RevPar index
Altoona
78.33%
$98.27
$76.33
100.01
Competitive set
74.00%
$103.00
$76.22
99.86
SECTION REVIEW AND DISCUSSION QUESTIONS
Section Objective:
Present tactics used by revenue managers to influence their
hotel’s occupancy rates and average daily rates and review how to evaluate the
success of tactics to manage occupancy and ADR.
Section Summary:
Revenue managers can use several tactics to improve their
hotel’s occupancy rates. When, for example, demand is strong on some dates, they
303

---

YIELD MANAGEMENT
Hoteliers and consumers know that when demand for rooms is high, rates may also
be high. When occupancy levels (demand for rooms) are relatively low, room rates
will also likely be lower. As RevPar is a function of occupancy and ADR, any decrease
(or increase) in one of these factors that is offset by an equal increase (or decrease) in
the other factor will yield the same RevPar. Yield management is simply a set of tech-
niques and procedures used to manipulate occupancy, ADR, or both to maximize the
hotel’s revenue yield. The business philosophy behind yield management, the princi-
ples involved in its proper use, and the techniques available to implement it are
important concepts for revenue managers to understand, and as noted in Roadmap 4,
yield management is the subject of this final section of the chapter.
Philosophy
Consider the following situations:
•
As a typical consumer, you go to your local grocery store to buy a loaf of bread
that usually costs $3. On this day, however, you find that the bread costs $6.
When you inquire about the high price, you are told that the store anticipates
significant demand for this type of bread on this day, and that the store will
likely sell all of this type of bread that it has stocked. As a result, the price per