The Rate Adjustment rule in the Yield Management module allow hotels to will increase or decrease the room rate based on the room availability.
What is Yield Management
Yield Management is a module in our booking engine and channel manager that presets the sale of your rooms during demand variations. It basically allows you to set rules to control your room availability and rates. Learn more about the Yield Management module on this article.
Rate Adjustment rule
Rate adjustment is one of the yield management rules. This rule when applied can increase or decrease the room rate based on its availability fluctuation. There are many uses like increasing room rates during a busy season to maximize your revenue or dropping the rates when there are dips in the demand to limit loss.
Increasing Rates
A good example of when a hotel should increase room rates based on availability fluctuations is during high-demand periods. For instance, consider a beachfront resort located in a popular tourist destination. During the summer when the demand for beach vacations is high, the hotel experiences an influx of guests looking to book rooms.
As the rooms start to fill up and the demand surpasses the available inventory, the hotel can utilize the Rate Adjustment rule in Yield Management to automatically increase room rates. The system can be set to raise the rate when the number of available rooms hit a certain number. This strategy maximizes revenue for the hotel, capitalizing on the heightened demand for accommodations during that period.
Decreasing rates
A hotel should consider decreasing room rates during low-demand periods. For instance, a ski resort might experience reduced demand during the warmer months when skiing activities are limited. As room availability exceeds demand, the hotel can create a Rate Adjustment rule in Yield Management to automatically decrease the room rate, enticing more guests to book and fill the rooms. This strategy helps in maintaining a competitive edge and maximizing occupancy during slower periods.
How to set up a Rate Adjustment rule
Yield Management is a free feature provided by Hotel Link. However, to activate it, you need to be using our Booking Engine. Once the feature is activated, please follow these steps to create a rate adjustment rule:
- Go to 'Yield Management' under the 'Booking Engine.'
- Click on '+ New Yield' in the left menu.
- Provide a rule name (e.g., 'Summer Rate Increase 15%').
- Choose 'Rate Adjustment' from the rule type dropdown.
- Specify the 'Availability Trigger' number that will activate the rule.
- Define whether the rates should increase or decrease under 'Adjust Rates.'
- Enter the 'Adjust Rates' amount or percentage.
- Select the rate plans to which the rule will be applied.
- Choose the distribution channels to which the rule is applicable.
- Specify the period during which the yield rule applies.
- Select the days of the week when the yield rule is applicable.
Rate Adjustment and Special Offer combined
When there's a rate adjustment rule and a special offer applied to the same rate plan, the system will apply the special offer to the room rate first, then apply the rate adjustment rule to the total booking amount.
Example:
Last night discount: 15% off.
Rate adjustment: 10% decrease.
If the room rate is $200, the calculation for a 2-night booking is as follows:
Special offer applied - last night discount 15%: $200 - 15% = $170.
The total booking amount for 2 nights will be: $200 + $170 = $370.
The Rate Adjustment is then applied to the total amount: $370 - 10% = $333.