Revenue and Yield Management for Tourism and Hospitality

REVENUE AND YIELD MANAGEMENT FOR TOURISM AND
HOSPITALITY
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Yield management is one of the key factors through which revenue and pricing strategy can be
maintained in the hospitality and tourism industry. I have learned its important role in this
industry where it is not easy to earn revenues. It is because there are a number of factors
involved such as competition, political situation and holiday seasons among others which
impacts the revenue rate. Hotel Sydney can provide the desired outcome only through the use of
proper planning and utilization of correct resources that can be done with the aid of yield
management.
The main focus of revenue and yield management is to access the number of rooms sold to the
customers and the price charged for it. According to Josephi, Stierand and van Mourik (2016,
p.255), yield management is identified to be a systematic approach through which numerous
hotels can increase their revenue in accordance with customer demand. Therefore, I believe that
it can help Hotel Sydney to address its existing problems and solve the issues accordingly. As it
is incredibly difficult and expensive to increase a hotel’s capacity after its completion, the hotel
management needs to work on the existing capacity to maximize its revenue.
There are two most important things that are needed to be considered while accessing revenue
rate of a hotel. One is the price of a daily average of room rate and the other, revenue per
available room or RevPAR. I have learned that Australian hotels have an occupancy rate of
74.5%. Among them, the average daily rate increased up to 1.5% while RevPAR increased up to
2% (thejournalofbusiness.org, 2018). The Sidney Hotel has experienced an increase in room per
year income from $237,399 to $579,952 in 2018. Its revenue rate has also increased up to 2%,
from $626,582 to $734,219 which justifies the annual growth rate of the hospitality industry (El
Haddad, 2015, p.1799). However, the competition is pretty tough as more hotels are entering the
market. I believe through yield management, Sidney Hotel can keep its position in the market as
well as increase its demand.
According to the aspects of HOTS Simulation, past performance should be accessed in order to
gain a successful outcome in future. As opined by Kimes and Wirtz (2015, p.42), yield
management is a strategy based on the theory of supply and demand. I can understand that these
two factors are interdependent on one another. Through the implementation of the appropriate
strategy, Sidney Hotel can achieve the desired result as asserted in the business plan of the hotel.
Through careful analysis of the hospitality industry, I have identified that demand of the market
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is the ultimate driving force behind yield management. I have learned that in order to implement
yield management, market segmentation is a must on the to-do list. The Sidney Hotel can
categories and group its customers by their references for market segmentation. As asserted by
Pereira (2016, p.15), there are a total of three aspects of market segmentation.
The first is accessing and grouping of the customers, the second is an application of demand
model through which the specific needs of customers can be accessed. The third component can
be asserted as their willingness to pay. I have observed that yield management can be utilized as
a boon for the Sidney Hotel. The strategy of a time-penalty approach can be integrated into the
hotel through which the price range of its services can be increased at a slow but steady pace. I
believe this would encourage customers to book in advance which can be included as additional
revenue of the hotel. Therefore, in peak seasons, a higher price can be charged while this rate can
be made lower during a slow time. Its impact can be felt on numerous tourists as they are the
most important customers. However, in order to sell more rooms go customers, a hotel might
offer it at a lower price. Although the rate of bookings is higher, the hotel might suffer loses. The
aspect can be mitigated through appropriate utilization of yield management.
This aspect of yield management, however, consists of a lot of assessment. As per the view of
Moro, Rita and Oliveira (2018, p.445), the price is an intangible item which fluctuates every day.
As per the HOTs stimulation, I have understood that the rate of assets owned by Hotel Sydney
can increase up to $20,491,358 from $19,391,012. Therefore, it is important to carefully access
the strategies so that the hotel can use its resources at full potential. However, yield management
consists of manipulation of the price range but many customers do not feel it as a fair practice. In
order to solve the problem of alienated customers, I believe Hotel Sydney can put a high
reference price to its customers followed by providing them with discounts. It would help the
customers to perceive the opportunity as fair. In order to do so, Hotel Sydney should properly
advertise its products in an attractive manner. It can be done with the aid of digital marketing
which is the most popular in the 21st century. Therefore, I can assert that through the use of
STAR method which denotes taking action based on situation for gaining appropriate result.
Through implementation of appropriate communication and sales strategies would help the hotel
to live up to its set objectives.
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