1. Yield management is a technique used in reservations, in a recent analysis by Donaghy et al(2008) the definition of yield management states that ‘Yield management is a revenue maximisation technique which aims to increase net yield through the predicted allocation of available bedroom capacity to predetermined market segments at optimum price’. This practice, used in almost all hotels, can be affected by many issues that can have a detrimental effect on profits, image and productivity.
2. Conceptually, yield management works within a framework set out by Jones and Lockwood (2005) who identified strategic operations as being concerned with the long term (focused on by head office), medium term (operations management) and the short term being handled by operational management (sales, front office, etc.). An issue with this however, is that such planning cannot always predict market conditions for the period, many hotels now allot rooms for use or sale (e.g. 50% of rooms kept unsold until a set date). This can tell the people in charge of yield management what a good price for the product is.
This can prove a very difficult balancing act for hotels, as many customers may have a more profitable stay for the hotel, but the chances of returning are far slimmer than another guest. In many cases, the short term yield is looked after more than the potential of a return customer, this in the short term increases profit, but risks losing a return customer. An example of this could be a couple on their honeymoon being preferred guests over a businessman who will be required to frequent the area many times, but with a shorter stay, the businessman may take his business elsewhere, or if accommodated for may bring much more revenue over a l...
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...al dissertation, Concordia University).
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2.) Russell, Roberta S., and Taylor, Bernard W., Operations Management, 4th Edition, ch. 11, pg. 511-535.
The leveraged Beta (Bl) of the lodging division, needed for CAPM, was derived from the following equation: Bl=Bu(1+D/E), where Bu is the unleveraged Beta. Bu was in turn derived from the weighted-average of the Bu's of the lodging businesses given in the case. The weighted-average method rather than a simple arithmetic-average method was used to allow a more accurate Bu of the overall industry.
Schneider, B. 1991, "Service quality and profits: can you have your cake and eat it too?", Human Resource Planning, no.14, pp.151-157.
1) Lewis C. Robert. Cases in Hospitality Marketing & Management. John Wiley & Sons. New York. 1997.
b) Managers – that they have very little to no control over their property or employees. It seems like many important decisions have been taken away from managers, and they can not react in the best interest for the hotel chain because what’s in the customer’s best interest is usually not the same as the company’s best interest.
Each condo-hotel unit is sold to individual investors who may use their unit for a specified amount of time, and when not used the investor has the option of placing it into an organized rental program. Rental revenue is shared with the operator and helps defray the unit owner's expenses.
Carpenter, M., Bauer, T., Erodogan, B., & Short, J. (2013). Principles of management. (2nd ed.).
The hotel or hospitality industry relies on guests who visit their facilities. In order to understand and project revenues it is critical that operators in the industry know how to calculate revenues. On the other hand revenue management in any business not only in the hospitality industry is important. Considering the perishable nature of hotel rooms as the main product under sale, it is important to focus on customer satisfaction in order to increase revenues. Therefore, hotel yield or revenue management is about balancing the demand for hotel rooms and the capacity through proper forecasting in order to maximize effectiveness of resources.
Up until recent years Revenue Management was something that has never been heard of. Now days, it is something that hotel managers cannot go without. They spend numerous amounts of time checking their computers for the nightly rates of the hotel. But what exactly is Revenue Management? “Revenue Management (RM) is a scientific technique that combines Operations Research, Statistics and Customer Relationship Management and categorizes customers into price bands, based on various services” (Revenue Management, 2010). In other words someone might reserve a room that is at a going rate of $245 per night while their cousin who reserved a room at the same hotel months in advance only has to pay $105 per night. Now you may ask yourself how hotels can get away with doing this? But what it all boils down to is that someone who reserves a room last minute will end up paying the higher amount because his or her demand for the room is higher.
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Mandatory resort fees of $10-$20 in the lodging facilities have become a huge inconvenience for the customers today. Hotels charges these fees to cover everything from parking, phone calls, use of pool and spa, internet and gymnasiums. Their argument is that it covers the use of all the facilities provided that need constant maintenance by the hotel staff. They believe that the customers don’t want to pay for each service they use separately as it adds to the inconvenience. Also, they can subsidize the cost of all of these services if they charge a resort fee per night for every customer.
Robbins, S. P., & Coulter. M. (2014). Management (12th ed.). Retrieved from: Colorado Technical University eBook Collection database.
Thanks to these factors, pricing becomes one of the primary uses with which hotels attract customers. However, due to customers’ independent nature, there influence over industry players is limited. In the high-end segment of hotels, price influence becomes even less as hotels find it easier to differentiate themselves from the competition and customers become less price sensitive coming to expect higher prices as a symbolism of superior quality and services. Lastly, corporate business and tour operators can exert more influence due to their large purchases but this affect is of a limited nature and does not extend across the whole
There are four distinctive characteristics, when dealing with supply response of perennial crops. According to Soontaranurak(2011), these characteristics separately and collectively, imply that producers must have foresight or long-term planning with reference to investment. First, perennial crops have a biologically-determined gestation period between planting and harvesting. Second, current production depends on previous output levels. Third, there are significant costs of adjustment which restrict the planting and removal of trees. Fourth, planting and removal decisions are restricted by both past decisions and the existence of binding non-negativity constraints about the adjustment process(technical conditions of production, the availability