Why use Yield Management in the tourism sector?

Yield Management is a commercial practice that consists of raising your prices according to demand. Already used for years with airline tickets, discover how this technique is used in hotel services.

Yield Management

Above all, this marketing and sales technique makes it possible to better understand guest behaviour in order to put a better sales strategy in place. Understanding this influence and anticipating it allows hoteliers to optimize their revenue. It is simply a matter of selling at the right time, to the right person, at the right price.

For example, you can lower your offers by 5 to 15% on quiet days (off-season, Sundays, etc.) or if your occupancy rate is below 30%. Even though you are lowering prices, this lets you fill rooms that would otherwise remain unsold if nothing were done. Conversely, during the busy season, depending on your geographic location, you can raise your prices. This will make sense to your guests. You simply need to know your figures and your type of clientele well, and take into account seasonality and specific dates.

The importance of Yield Management

It is important to note that Yield is an effective technique that delivers results in the medium/long term.

Be careful not to offer exorbitant prices, so the guest does not feel taken advantage of. In the internet age, guest satisfaction is king. Reviews are visible to everyone, and that is what will build the property’s reputation. It is therefore important to take care of the guest and understand their needs.

In addition to guest satisfaction, you must pay attention to your property’s image. Depending on how this pricing system is used, it can either benefit or harm your image.

How to adapt your pricing?

You should know that implementing Yield Management properly can increase your revenue by 3 to 7%. There are, however, several aspects to take into account.

• seasonality;
• special events (Valentine’s Day, July 14, concerts…);
• school holidays;
• the type of profile (business stay, solo, seminars, leisure…);
• packages or promotional offers;
• the occupancy rate.

The simple formula for calculating Yield is: actual revenue / maximum potential revenue.

The 3 pricing strategies

To adapt your rates properly, you have three options, in other words three different strategies you can apply.

The penetration strategy, which is quite risky, consists of setting a very low price in order to destabilize the competition. However, with this type of strategy, you will not be able to make a margin.

The economy strategy relies on prices lower than the market. A simple, basic product that nonetheless meets the guest’s basic expectations. (Mainly used in supermarkets.)

The skimming strategy, means setting a higher price than the market in order to signal quality and reach a more affluent target. This helps create a feeling of exclusivity.

You can always use psychological pricing, which is a 100% effective sales technique.

Discovering Reservit Yield

Reservit Yield is the tool that will make your job easier, as you can gain up to 20% in additional revenue.

How does it work? It’s simple: our algorithm is based on your competitors, your online reputation, your occupancy rate and seasonality to guarantee maximum reliability. Our rate recommendation lets you optimize your selling prices and improve your occupancy rate.

Optimized software designed 100% for hoteliers: optimize your rates hassle-free and get an effective strategy.

Yield Management has proven itself over time, as long as a sound analysis of the business has been carried out and a personalized, appropriate strategy has been put in place. The occupancy rate is important, but don’t forget to favour direct bookings to avoid OTA commissions.

Julie
Communication Manager
In partnership with Jennifer Therond