Yield Management

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What are the unique characteristics of a hotel?
High fixed costs and low variable costs, fluctuating demand, perishable inventory, ability to segment customers
What is another characteristic of a hotel that makes it ideal for yield management?
Book customers in advance, fixed capacity
Why are marginal sales costs low for a hotel?
Selling another room when you have already sold man doesn't make a huge difference in costs. the staff is set and the maids are ready to go
Why are marginal production costs high for a hotel?
Because if the hotel is full, you can't just add another room because of the high fixed costs. Hotels add rooms and large chunks after carefully observing demand trends. Adding one room at a time would be too much and a hassle.
What 5 things are required for management yield system to work well?
booking patterns, demand patterns by segment, overbooking policy, a knowledge of the effect of price changes on demand, a good Information system
What are some challenges caused by yield management systems?
Low employee morale, less incentive of workers to make sales/friendly service, training, multiplier effect, multiple night stays(low rate start stay thru high rate days), alienate customers with over fluctuating pricing
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