Revenue Management In The Hotel Industry

Yield management /Revenue management originates from US airline industry in the end of 1970s. Although only two decades old, the discipline of yield management is suddenly taking the business world by storm. In the airline industry, where it first really took hold, revenue management practices and technologies have become the primary elements in increasing revenue and profit. Meanwhile, many airlines that were slow to embrace revenue management or failed to implement it properly are now severely disadvantaged or bankrupt. Similar stories appear in hospitality. One important characteristic of the hotel industries is its inability to adjust inventory supply over a short period. With the nature of capacity constraint and seasonal demand characteristics, a hotel is normally unable to fill its available rooms with full-rate or walk-in customers. That is, the unoccupied or unsold rooms, when the demand for hotel rooms is low, are wasted. In contrast, if the demand for hotel rooms is high, the hotel cannot meet its high demand because of its constrained capacity, potential revenue is likely to be lost. How to balance the demand against the available capacity is a significant management issue to hotel industries. Revenue management arose from the growing need for accurate demand estimates and resource allocations.In developed countries, yield management has been used quite extensively in airline and hotel industries, the China hotel industries has been slow in adopting this flexible revenue management technique. This thesis studies and analyzes the yield management theory systematically. The thesis aims to make an introduction of yield management and try to apply it to China hotel industries. The thesis is composed of 4 chapters.In the first chapter, we introduce the process of the development of yield management, the background of its origination, its definition and qualification.The second chapter concentrates on the definition of yield rate and therelationship with occupancy rate and average room-rate.As the core part of this thesis, the third chapter analyzes and studies overbooking, various pricing, forecasting and policy support.In the fourth chapter the thesis discuss what we should pay attention to when we apply the yield management theory to hotel industries.