Transcript Yield Management

Yield Management
Definition (Doughty et al 1995)
• A revenue maximisation technique
• aiming to increase net yield
• through the predicted allocation of available
capacity
• to predetermined market segments
• at optimum price
Aims
• Maximise occupancy percentage during low
demand
• Maximise average yield during high
demand
• Increase business from price sensitive
segments without reducing yield from
existing customers
Preconditions Kimes (1989)
• Fixed capacity
– cannot quickly adapt to demand
• segmented market
– able to target offers to specific groups
• perishable inventory
– must be sold on the day
• advance bookings
• irregular but predictable demand
Ingredients
•
•
•
•
Market segmentation
known patterns of demand and bookings
knowledge of competitors prices
ability to communicate price changes
quickly
• overbooking policy
Problems
• Effects on secondary spend
• customer resentment
– perceived fairness
• reduced role of employees
– effect on incentives and commission
• is YM compatible
– with good service
– with relationship marketing?
• Commoditisation
– encourages customers to ‘shop around’
The Consumer fights back!
• Farecast.com
• website
References
• Brotherton B and Mooney S ‘YM-progress and prospects’
International Journal of Hospitality Management 11, 1 ,
23-32
• Donaghy, K et al (1995) Yield Management, an overview
International Journal of Hospitality Management 14, 2,
139-150
• Kimes, S.E. (1989) The basics of YM The Cornell Hotel
and Restaurant Administration Quarterly November 14-19
• Kimes, S.E. (1994) The perceived fairness of YM The
Cornell Hotel and Restaurant Administration Quarterly
February 22-29