Pearson New International Edition International pcl tp indd 1

REVENUE MANAGEMENT
306

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They have, or can create, clearly discernible differences in service or product
levels that can be easily explained to guests.
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Their property is willing to commit the resources necessary to properly train
staff before implementation of yield management.
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They seek to maximize RevPar.
Techniques
Actual yield management techniques used by a revenue manager vary by property.
Nevertheless, in their most simple form, these techniques perform the following
actions:
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Forecast demand
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Eliminate discounts in high-demand periods
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Increase discounts during low-demand periods
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Use MLOS and CTA to maximize revenue in high-demand periods
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Implement special Event rates during periods of extremely heavy demand
This chapter focused on the importance of establishing room rates and managing
those rates in response to guest demand. Many of the techniques used by modern PMS
software to accomplish these tasks are mathematically advanced. However, their results
must be easily understood by revenue managers; if they are not, they should not be
used. In the final analysis, it is revenue managers’ skill and experience in maximizing
yield that is most critical to the process.
Assume that you are the revenue manager for a hotel hosting teams in a regional
tournament leading to the NCAA basketball finals. Your hotel has secured the busi-
ness of the team ranked number 12 in its bracket, and it is playing the team ranked
number 1 on this night. The team has reserved rooms for the next three nights, but,
if it loses tonight’s game, it will go home in the morning. If it wins, it will stay an-
other night (or two). In 95 percent of the cases, it will lose. How do you know? Because
you understand basketball rankings and the historical frequency (almost never!) that
a team ranked number 12 beats the team ranked number 1. Therefore, you predict
that the team at your hotel will be an early departure. Your PMS does not “under-
stand.” The system simply knows that the team is planning to stay until the final
game. Computers and sophisticated software programs are tools to be used by rev-
enue managers, but they cannot replace experience, common sense, and human
insight (plus, as many FOMs would attest, a little luck) when making revenue man-
agement decisions.
As another example of the importance of human intervention, consider the case
of the corporate traveler who stays at her favorite hotel nearly every Tuesday and
Wednesday night. On one Tuesday, she is told that her normal, discounted corporate
rate of $99 cannot be honored because the hotel forecasts a sellout. The rate she must
pay is now $149. In this case, the hotel’s new revenue manager is aggressively man-
aging yield and, perhaps appropriately, has eliminated corporate discounts on this
day. When the corporate traveler complains that she is a loyal customer who has
always been willing to pay the assigned corporate rate (even when the hotel was not
busy), the front desk agent says, “There’s nothing I can do.” Should the hotel be sur-
prised when that guest leaves and doesn’t return? It should not, and she likely will