yield management

Average Daily Rate Formula
ADR= Room Revenue/Number of room nights sold
Yield Management
To sell the right product, for the right price, to the right person, in the right period
Effective Revenue Management
Perishable Products
Varied, but predictable Demand
Fixed-Capacity Environment
High fixed costs and low variable costs
Occupancy Percentage
Room nights sold in a period / room nights available in that same period * 100
RevPAR (Revenue per available room) equation
ADR * Occupancy Percentage
RevPAR
considers both, rate and volume/occupancy when looking at the revenues generated by a hotel.
If only one measurement is used, we are not able to determine if a hotel is maximising room revenues.
shows how well management is able to increase the average rate and also achieve higher volume/occupany to maximise revenue.
Ways to achieve higher revpar
Forecasting/pricing
Overbooking
Forecasting/Pricing
-identifying dates of high and low demand (e.g. events)
-use of historical booking data (DOA calculations
) -levelling out differences between demand and supply by price and capacity limitation & duration control
selling the same product at different prices to different customers
Overbooking
Accepting bookings over capacity limit to level out unrealized bookings (no -shows/spoilage costs)