Rooms namagement Essay Example

not provide a clear financial picture of the hotel's actual status. The average daily rate of a hotel is affected by various factors, including external ones such as weather, natural disasters, and public events like carnivals or concerts. The principle of supply and demand affects both the TAR and occupancy. The use of yield management in conjunction with forecasting financial performance is critical for hotels to consider all factors that impact revenue and profitability. Using both tools effectively is key to accurately forecasting and assessing the hotel's financial performance. This essay will evaluate the advantages and disadvantages of yield management for the organization, its employees, and customers, according to Hayes and Miller's Revenue Management for the Hospitality Industry and Allan's Revenue Management and Hotel Operations.Yield management is a technique used by many industries to extract maximum revenue from a fixed quantity of perishable goods and/or services (Netter 2005). It involves selling a room/product at the right time, on the right day and for the right price, thereby maximizing revenue and effectively maximizing profit (Allan 2012). Despite its advantages, there can be several disadvantages of yield management. For instance, if a hotel increases rates on rooms on a certain weekday because of an event such as a concert that is happening nearby and occupancy is expected to be high, the hotel may generate more revenue and therefore profit. However, regular clients who are not aware of the nearby concert may feel unfairly charged. As a result, this may cause conflict and damage customer relations for the hotel. Furthermore, employees who have to deal with these complaints may also suffer, as they do not benefit directly from

increased custom but have to deal with the problems caused by the hotel's poor yield management practices.When considering yield management in hotels, managers must take certain factors like season/weather, national events such as the Notting Hill carnival, the Queen's Jubilee, and particularly the Olympics into account to appropriately set prices and predict occupancy. Effective use of this tool can result in increased revenue and profit. Yield management is not just about increasing prices; it's about being flexible with rates and availability to increase productivity. For example, during a forecasted slow period with bad weather, it would be wise to decrease prices to increase occupancy. Unsold rooms cannot be sold again, resulting in lost revenue. Therefore, decreasing prices during periods of low occupancy can generate revenue that would otherwise be lost. Offering cheaper prices during times of low demand also fosters positive customer relations and is a good business practice. (Hayes, D & Miller, A., 2011).If a hotel fails to implement effective yield management, they risk losing customers during times of high supply and low demand. This may cause customers to choose a cheaper alternative. Similarly, if a hotel does not increase prices during periods of high demand, they will lose potential profits that could have been gained by charging more for their product due to the increased demand.