Revenue Management for Hospitality Industry

This article discusses yield management and revenue management strategies for the hospitality industry, with a focus on the Emirates One & Walton One Valley hotel in Australia. It covers tools and techniques used to manage revenue and optimize business volume, including market intelligence, reports, technology systems, and price/value relationships.

Running head: YIELD MANAGEMENT
Revenue Management for Hospitality Industry
Name
Institutional Affiliation

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REVENUE MANAGEMENT FOR HOSPITALITY INDUSTRY
Executive summary
A hotel is a business enterprise that involves hospitality and it yields income. The income needs
to be managed in a very good way to make sure the business stands. The revenue management is
an indication of the income management that aims at optimizing and minimizing business
volume. In simple terms, the yield management is a strategy that is designed in a way that it
makes sure that the business returns are kept as high as possible. In general, the instruments used
in income management are used when things needed beforehand are met.
Yield management also involves an understanding of the customers and their behavior so that the
firm can be able to produce as per the consumers' expectations. Management of yield also
involves using of some tools and strategies to make sure that the revenue is managed well
without waste and the ultimate goal is met. These tools are; reports, tools, market intelligence
and technology systems. Price /value relationship is also vital in the management of the yields to
be able to monitor the customer's purchasing power of the goods or services. These all combined
together gives a very organized strategy in yield management which is aimed at making sure that
the business objective or goal is met.
INTRODUCTION
Yield management is a strategy of variation in pricing based on understanding, influencing the
behavior of the consumer and anticipating with an aim of increasing revenue or profit to the
maximum from a fixed time-limited resource such as hotel room reservations or advertising
inventory or airline seats. The inventory-focused branch of revenue management is also involved
in making sure that goods are sold at the right time, to the right customers and the goods are of
the right quality and for the right price. The whole process can result in discrimination in the

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price where the customers who take this identical goods services which are changed different
price-yield management for several major industries is a large revenue generator.
In a business enterprise like hotel managers are faced with a decision involving timing and
reservations of rooms but after using the yield management techniques the decision is met. Some
of the decisions which need the hotel to use the yield management techniques are whether it's
better to book many rooms as they can in advance and make less per room or hold off marking
reservations and charge more per room. The techniques make sure that the hotel's resource is
used in the best way to maximize revenue (Altin, et al 2018). Some techniques are as follows;
protection level estimations, inelastic v/s elastic demand, dynamic pricing and overbooking.
Some business like hotels, airline and tour operator have a thing in common in that all of them
sell fixed limited resources like the pricing of hotel rooms where the fixed price of the rooms do
not help. In the pick seasons, the rooms might be charged at a high price for example in case of
an event. Others like industries involved hospitality and tourism have a difficulty in dealing with
constantly fluctuating customers.
In the management of revenue in hospitality industries, it is important to check on first the
customer knowledge and consumer behavior. This again has some several components like
consumer purchasing behavior and the price/value relationship (Etemad-Sajadi, 2018). To
understand customer-centric approach, define total consumer value, and marketing intelligence
resource availability, one must know the concept of bundling, dynamic packaging and branding,
management and other information on expenditure, trends in demographics, length of the stay
purpose of the visit, where did they come from, how did they arrive at and why (Sadigh, et al
2018). This information is very important in understanding customers and the consumers.

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The earliest application of the yield management was done in the 1900s where it was done in a
very simple way.
Description of the business
In Australia, several hospitality businesses earn a lot of revenue that must be managed. Taking
one of the best hotels in Australia, we will be able to analyze all the information concerning
management and yield and revenue management. Emirates one & Walton one valley is a world-
class hotel in Australia with beautiful surrounding unique location and world-class
accommodation (Prebensen, Chen, & Uysal, 2018). The hotel is located in the great range of
Australia between the garden of stones and Wollemi national parks. It occupies an area of 7000
acres of its own. The hotel also has a history and culture section that is very old and gives it a
better look in terms of culture and history. The hotel target market is the Australians thought it
also receives guests from outside countries (Tucker, et al 2018). The hotel has well-designed
rooms with the best dining tables, guest rooms and other improved facilities to suit the customers
demand.
The hotel has facilities and services designed to make the customer be satisfied. The hotel
management has first understood the consumer in that the services offered here are as the
customers need (Möhring, et al 2018). The hotel has cabins and desk chair that surround the
swimming pool that has a shape of a kidney. Outside every cabin there are mountain bikes to suit
every age, horse riding, guided nature walk tennis court, an archery range, stargazing tours and
hosted wildlife safaris (Riasi, Schwartz, & Chen, 2018). The hotel also uses a wide range of
professional treatments using Sodashi products e.g. facial treatment that is regenerating skin and
calming the skin. All these treatments are aimed at making the customer happy and thus increase
the demand for the hotel that contributes to higher yields. The business is capable of improving

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its productivity in the peak seasons by offering services that are not offered by others in other
areas (Yusuf, Al-Zaza, & Walton, 2018). It can also bring offers to the customers so that it can
maintain them.
The following are some of the man components of the hotel; bar, kids bar, spa, restaurant, pool,
WI-FI, steam room, sauna, fitness centre laundry, parking, room service and tennis court which
are world class to meet the customers demand. Stuff in the hotel is managed well in such a way
that the tour guides the attendance in the restaurant and in the booking, rooms provides an
excellent service (Foris, Popescu, & Foris, 2018). The hotel has appointed One&Only Resorts, a
subsidiary of Kerzner International Holdings Limited, to manage all the activities and stuff in the
hotel.
The hotel has its peak seasons and the tough seasons of the year. In seasons where there are
holidays and festival season, the period is when the hotel makes a lot of profit (Maier, &
Intrevado, 2018). This peak period is when the hotel receives weddings tourists and guests from
their countries. The hotel also is faced by a hard time when it is off-peak periods, there are no
guests in large numbers, and this might be brought by a bad climate and weather change e.g. in
winter the people will try to move to warmer countries.
The cost structure of this hotel is not fixed as it varies from season to seasons. When its peak
period or season the price will shift up and the business makes a lot of profit (Jabeen, Friesen, &
Ghoudi, 2018). When it is the off-peak periods, the hotel will even lower the price to encourage
the customers to buy their services. Emirates one & Walton one hotel has its direct competition
where it competes with other big hotels in Australia e.g. Sofitel Sydney daring harbor, Primus
hotel Sydney, Meriton suites Eastwood.

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Market segments of the hotel
The hotel has its market mostly to the people of Australia i.e. Australians citizens. The people
enjoy the place because of its location and its history and cultural look. Nevertheless, the hotel
also gets its market from outside countries that are attracted by the wildlife in it and the excellent
facilities and services in it (Jabeen, Friesen, & Ghoudi, 2018). They book for weddings and great
meetings that are which in essence gets the best take. The market segment is well structured by
the management team to be able to reach the goal of the hotel that it is ultimately to make a lot of
profit and make sure that the customer is satisfied in all levels.
Hospitality yield and revenue management
Understanding the consumer is the most primary thing and the first step in hospitality and yield
management strategy in any business dealing with hospitality. Emirates hotel has greatly
understood the customers in that it has been able to provide services which are relevant to the
customers e.g. swimming, Wi-Fi, or free internet for customers to browse easily, horse riding
tennis court kid’s bar and the like (Altin, Uysal, & Schwartz, 2018). The fact that the hotel has
understood its customers gives it an opportunity to manage its revenue well to make the best out
of it and to satisfy its customer that is its ultimate goal. The hotel has also been able to market its
services in every way to increase its sells. It does this through online services, media and
newspapers (Damir-Geilsdorf, & Pelican, 2018). The hotel also gets to use promotions like free
services e.g. free breakfast for the visitors to encourage them to go back to the hotel repeatedly
and invite others to the same.

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Yield management tools
This is ways to make sure that the hotel manages its revenues well and that it hits the goal and its
targets. The hotel can apply the following tools to manage its revenue and monitor its
expenditure. Reports are some of the tools used in the management of revenue in a hotel. There
must be reports in every activity in a hotel to be able to analyze the flow of the past events and
this gives a better view of what should be done to improve the service based on the report.
Reports can be as follows: segment pace report, hotel KPI dashboard, arrivals, departures stay-
overs, and no show tracking (Ferrada, 2018). Month-end summary reports, annual budget
template among others are some of the most relevant reports in the management of revenue in a
hotel. The second tool is market intelligence that is also vital in the management of the yields in
a hotel. The hotel must be aware of the market trends and its changes in demand and shifts
(Taylor, Snipes, & Barber, 2018). The awareness gives the business a chance to improve on its
goods and more so services in the whole organization.
The other tool is the technology /systems, this includes; PMS with advanced rate management
options, channel manager, two way PMS interface, business intelligence system etc. The
technology tool is also very important in management of the revenue for it makes management
easier in that we use technology in marketing online and advertising in all sections, booking of
rooms are now done through technology and this makes it very convenient to the customers
(Hample, D., & Richards, A. S. (2018). The final one is tools that are rate-shopping tool, review
score tracking and intelligence. These tools are essential in the management of the revenue in a
hotel, for example, the managers need to review the performance of the business as well as see
the rate of shopping and the supply of its goods and services. Some of this strategies are not used

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e.g. discounting and personnel/celebrity advertisement which is also very relevant to increasing
the revenue for better management
CONCLUSION
In conclusion, hospitality business like hotel airline is a very sensitive business in terms of their
approach to the customers. The hotels and airlines will have to manage all the yields in a very
smart way by first understanding the customers and identifying their interest so that they can
meet their expectations .the the second step is to identify the marketing strategy and how to
compete favorably with other enterprises. This has been seen well in the chosen hotel i.e.
emirates one & walgon one hotel in Australia which has put on strategies and tools to make sure
that the customers are satisfied. It has its marketing strategy as well as promotions to make the
best service.
There also tools that have been used by the industries in revenue management which makes sure
that the hotel is running smoothly without making an unnecessary expenditure or making losses.
These tools include technology systems, tools, market intelligence and reports. In the
management of yields, the business must also consider the price value relationship that is well
depicted in peak and off-peak periods in the hospitality industries. The price/value relationship
affects the purchasing of the customer and this need to be incorporated in yield revenue
management of the firms.

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