Question

ndustries are hard hit by COVID-19 and the hospitality industry is no exception, as a Front Office
Manager, discuss with examples five (5) benefits of adopting yield management in your operations
in this season. NOTE.PLEASE DISCUSS DO NOT JUST LIST THE BENEFIT BUT RATHER EXPLAIN.

Answer 1

In the present situation when it seems the entire world at some kind of migration. The COVID situation is truly unwelcomed and has arrived with no prior information, every industry is struggling hard to survive. The yield management technique comes to rescue the hospitality industry and has a lot more potential and a lot to offer. Apart from huge volumes of bookings let us see what other possibilities does this yield management has to offer to the hospitality industry.

1. The industry can expect to have an increased revenue in present time - suppose you are the owner of a hotel with 10 rooms, let us assume that the revenue would be $100, now clearly see the difference between these two scenarios namely -

- Scenario 1: if your all the 10 rooms are rented or booked you will earn 10*$100 = $1000

- Scenario 2: using the yield management technique you increased the room rent from $100 - $150 during the peak seasons for all the 10 rooms. Now, the total earning would be $1500 (this is the potential revenue). In the second scenario, you clearly earned 50% more.

2. Decreased error chances - less probability of making mistakes, the accurate demand forecasting techniques make sure to eliminate risk or any miscalculated risks. Without yield management, a business owner generally changes the price of his rooms in a very random manner during peak timings but with the yield management, he has to do demand forecasting. This gives you exact figures and data using which a better rate can be fixed in the prime time or when the hiking season arrives.

3. It helps to better understand your customer behavior and expectations - we all are aware of how dynamic the hotel business environment is, the taste of your customers, and also their preferences keep swinging. Let us take this in this manner, you have seen some customers prefer to have a complete automated services while others prefer to have more authentic and personal experiences. With an effective yield management strategy, you can analyze and understand their expectations, which is again a winning strategy for the hospitality industry.

4. The yield management strategy gives you a chance to segment your offerings more efficiently - you as a business offer can create such segments like - low prices for leisure-oriented guests who generally refers to books ticked well in advance whereas some corporate people or guests who does the bookings in a very short time and thus be charged more.

5. You can have competitive pricing - with the above-mentioned list of benefits under the yield management, it also offers a competitive pricing to its users. If you consider the fourth case you can see the next step after it is achieved will be to incorporate a sense of competitive pricing.

Conclusions - The above-mentioned discussions of points are just a tip of an iceberg, with Yield management techniques you can earn more, understand your business, can have a great revenue-maximizing machine, but only when you can analyze the factors and implement it properly.