Overall, yield management is a powerful tool that can help hotels to increase revenue, manage inventory, and maintain a competitive edge in an ever-changing market.
Types of yield rules
How to create an auto close rule
How to create a sell limit rule
How to create an availability cap rule
How to create a rate adjustment rule
What is Yield Management?
Yield Management is a feature in your 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. With the Yield Management feature you can:
- Close rooms with a low-profit margin when demand is high and availability is low.
- Set availability limits to prevent oversales of your low-profit rooms.
- Regulate the number of rooms available in specific sales channels.
- Control the number of rooms that can be booked in bulk.
- Increase or decrease room rates based on availability fluctuations.
What are the benefits and advantages?
The concept of Yield Management is based on understanding, anticipating, and influencing your guest’s behavior, to maximize revenue or profit for your property.
- Increase revenue: it allows hotels to boost revenue even if the hotel is not at 100% occupancy.
- Understanding booking patterns: it allows hotels to adapt prices to booking behavior.
- Reduce pricing errors: it helps hotels to forecast supply and demand accurately, thus setting room prices.
Types of Yield Rules in the Booking Engine
There are four types of yield rules in the system:
Auto Close: The Auto Close rule automatically sets a “stop sell” to a selected room type or rate plan when the room availability reaches a certain value. This can be useful to close rooms with a low-profit margin when the demand is high and availability low.
Sell Limit: The Sell Limit rule automatically applies a “stop sell” when a rate plan is sold a certain number of times. It can be useful to eliminate the risk of overselling a particular offer.
Availability Cap: The Availability Cap rule limits the maximum number of rooms that are distributed and can be booked at the same time. It can be useful as it gives properties more control over the sale of the inventory on particular sales channels.
Rate Adjustment: The Rate Adjustment rule will increase or decrease the room rate based on its availability. There are many uses like increasing room rates during a busy season or dropping the rates when there are dips in the demand.
Please note: The Yield rules will not affect the availability you see in your booking engine.
To generate a Yield rule, follow these steps:
- Log in to the extranet.
- Navigate to Yield Management under Booking Engine.
- Click "new yield" on the left-hand menu.
- Provide a brief and straightforward name for your yield rule.
- Choose the type of yield rule you want to generate from the dropdown menu.
Auto Close
- Specify the availability trigger, which when met, will activate the rule for the chosen room type or rate plan.
- Designate the room type or specific rate plans to which the auto close yield rule will be applied. (Note: If you select a room type, all rate plans in that room type will be applied this rule)
- Specify the channels for which the auto-close yield rule will be enforced; the Direct channel pertains to your Booking Engine/Website.
- You may optionally define the Date Range to establish the period when the auto-close rule takes effect. You may also choose to specify the days of the week when the auto-close rule is enforced.
For instance, suppose you have a low-yield room rate, such as a "double room - weekday offer," and a high-yield room rate, such as "double room - standard rate." In that case, you can establish a rule that permits the sale of both rates when availability is high and imposes a "stop sell" on the low-yield room rate when availability is low.
Sell Limit
- Specify the sell limit number, which when met, a stop sell will be applied for the chosen rate plan.
- Designate the rate plans to which the sell limit yield rule will be applied.
- Specify the channels for which the auto-close yield rule will be enforced; the Direct channel pertains to your Booking Engine/Website.
- You may optionally define the Date Range to establish the period when the sell limit rule takes effect. You may also choose to specify the days of the week when the sell limit rule is enforced.
Suppose you offer a "spa and breakfast" package that features lodging and a 90-minute massage. If you prefer or can only supply a restricted number of massage sessions each day, you can establish a selling limit for this package to avoid overbooking or overselling the package.
Availability Cap
- Specify the maximum number of rooms to promote in the "Max of Advertised Rooms Available" section. Your room categories will not be promoted beyond this limit.
- Choose the room type or rate plans to which the availability cap rule will be applied. (Note: If you select a room type, all rate plans in that room type will be applied this rule)
- Choose the channels that the availability cap rule will apply to.
- You can specify the Date Range to establish the period during which the rule will be enforced, but this is optional. Similarly, you can choose to define the days of the week when the rule will be enforced, but this is also optional.
Suppose your hotel has 30 rooms available each day, and all are available across all reservation channels. There is a possibility that all 30 rooms may be booked at once at a suboptimal rate. To avoid this, you could establish a limit that only 5 rooms can be reserved on any channel at any moment.
Rate Adjustment
- Set an availability trigger that, when reached, will adjust the rate of selected rate plans.
- Specify whether to increase or decrease the rate, and choose whether the adjustment should be a percentage or a flat amount.
- Select the applicable room type or rate plans and channels for the rule to take effect.
- Optionally, set a date range during which the rule will be applied, as well as specific days of the week.
Imagine a property with 10 luxury rooms. A Rate Adjustment rule is created with an availability trigger of 5. When 5 of the luxury rooms have been sold and only 5 rooms are left to sell, the system will automatically increase the room rate by 30% across all connected OTAs. This means customers booking directly via the hotel website will not be affected by the rate adjustment and will still have access to the lower (previous) rate. Only customers who book through external channels, such as OTAs, will see the new rate.
Delete a yield rule
To delete a Yield rule, follow these steps:
- Navigate to the Yield rule you want to delete from the left menu.
- Scroll down and click on the Delete button.
- A confirmation pop-up window will appear, click Yes to confirm the deletion.
Note that deleting a yield rule will remove any restrictions that were applied by the rule. As a result, the affected room rates or room types will become available for sale without any limitations.