How do hotels manage revenue well?

Yield Management, also known as income management, originated in the United States in the 1970s and was introduced to China in the late 1990s. Its theory is revenue management for non-storable assets or perishable goods, and it is also a dynamic pricing strategy to increase revenue.

In recent ten years, it has been successfully applied in many industries and received attention. It has been widely used in the service industry. Successful cases include: American airlines increase revenue by $654.38+0 billion annually; From 1995 to 1999, the sales of American automobile industry rose from 3 billion to 7.5 billion, of which 3 billion came from the application of revenue management methods and systems. Revenue management is a relatively new technology, and its basic principle is to adjust the balance between supply and demand by applying the principle of price lever, replace cost-oriented pricing with demand-oriented pricing, and replace unified pricing with differential pricing.

Revenue management is a service management system to maximize the profitability of hotels for hotel owners. By identifying the profitability of market segments, determining product value, price setting, discount generation, reservation filtering standards, and effectively controlling prices and room resources, the system achieves the goal of maximizing hotel profitability. We usually define revenue management as selling hotel products or services to the best guests at the best time, at the best price and through the best sales channels, so as to maximize hotel revenue. Pass? Five at most? The perfect combination of Internet and computer technology can effectively solve the practical problem of the hotel industry's overall income decline due to limited resources idle or price competition. By means of market segmentation, demand forecasting, differential pricing, dynamic pricing, capacity control and room overbooking, the manual experience and computer intelligence are highly combined to minimize the waste of hotel resources, tap the market profitability, and finally maximize the hotel revenue.

When it comes to revenue management, managers often misunderstand that it can only be effective when the room occupancy rate is 100%. Actually, this is a misunderstanding. Hotel revenue management is a technology based on price lever to adjust the balance between supply and demand. Whether the hotel is full or not, this technology can play an effective role and maximize the income for each market segment. For example, in differential pricing and capacity allocation, it is only based on market segmentation and capacity control technology and is not affected by room occupancy; The oversubscription technology is effective only when the hotel can realize full room. In addition, the main indicator to measure hotel revenue management is neither the average room occupancy rate (OCC) nor the average room price (ADR), but the indicator of their interaction? RevPAR (revenue per room). Among many operating indicators of hotel room sales, only RevPAR can most effectively reflect the level of room revenue. Therefore, hotel managers should eliminate this misunderstanding and correctly understand the importance of revenue management in hotel applications. So, how does revenue management maximize revenue in hotels? The author makes a brief description from the following aspects for readers' reference!

First, data mining and demand forecasting.

Because hotel rooms are perishable products, the market demand fluctuates frequently and has considerable flexibility. Therefore, it often brings time pressure to customers, which increases the extensiveness and rapidity of customers' choice of hotels. If the hotel marketing or revenue department can't accurately grasp the future market demand, it will not only lose potential income and waste resources, but also lead customers to flow to other competitors. Through the implementation of demand forecasting, the market data of the past years are captured from the hotel PMS system, and a forecasting model is established by using scientific forecasting methods. Through data mining, hotel managers can accurately grasp the pulse of future market demand and improve the predictability of market judgment. Therefore, the implementation of demand forecasting technology can help hotel managers effectively solve the following problems.

1) Understand the future housing price trend, accurately formulate future housing prices and implement price dynamics;

2) Forecast the booking volume in a certain period of time, and increase the single room income through differential pricing and capacity control;

3) In the period of strong market demand, predict the miss rate and room cancellation on a certain day, so as to make the overbooking quantity more accurate and avoid the occurrence of overselling, which not only achieves the effect of full rooms, but also avoids unnecessary costs and expenses caused by overselling.

Second, market segmentation and differential pricing.

Differential pricing refers to the behavior and method of setting different prices for different customers or market segments through the same hotel products (like rooms, restaurants, sports or entertainment projects, etc.). ). Differential pricing is both an art and a science. Its artistry lies in finding a way to segment the market, allowing us to charge high prices for customers with high willingness to pay and low prices for customers with low willingness to pay. Its scientific nature is embodied in making and updating prices with the help of various technologies, so as to maximize the total income of all market segments. From the perspective of economics, we realize differential pricing by introducing the concept of price discrimination. In the hotel market segmentation, we should fully consider the following principles to ensure the effectiveness of the segmentation. First of all, market segments should be measurable and accessible. Market capacity and hierarchical structure can be measured, and can be achieved through various marketing means; Second, the market segment should have a certain scale, and the market capacity should be enough to make the hotel profitable; Third, each market segment should have considerable purchasing power, so that hotels can obtain greater benefits through revenue management; Fourth, it is necessary to ensure that the average willingness to pay in each market segment is different, and differential pricing can be implemented conditionally; Fifth, market segments are sustainable and have corresponding time continuity. In order to meet the needs of differentiated pricing, combined with the structure of the hotel tourist market, the author believes that hotels can consider differentiated pricing according to the following different markets. Group pricing; Including personal price, student discount, membership discount, etc. ; Second, channel pricing; Including OTA price, company agreement price, travel agency price, government price, etc. Triple pricing; Including advance booking price, joint check-in price, off-season price, final check-in price and long-term check-in price. 4. Quantity discount price; Including group price, conference price, wholesaler price, etc. 5. Preferential discount price; Including promotional price, new product price, special event price, guaranteed house price, etc.

Although differential pricing can bring more benefits to hotels by finding guests who are willing to pay high prices, it is also limited by the following objective facts. Hotel managers should consider the following factors when adopting differential pricing, and try to avoid them to reduce risks. First, incomplete market segmentation. Because it is impossible to accurately measure each customer's willingness to pay and form a complete market segment, the best way to take at present is to group the market segments according to the above methods; The second is erosion. If differential pricing is adopted, will those customers with high ability to pay? Pretend? Customers with low willingness to pay try to buy at a lower price, which erodes the interests of the hotel; The third is arbitrage. Differential pricing also provides opportunities for third-party arbitrageurs, who will buy goods at low prices and then sell them at below-market prices to obtain the difference.

Third, dynamic pricing and price optimization.

Dynamic pricing is based on the forecast of market demand, which makes the hotel's house price change with the change of market demand, and finally matches the market fluctuation trend, thus eliminating the disadvantages of losing high-priced income at the same price during the strong demand period and losing customers at high prices during the declining demand period. Because the demand forecast is always at the front end of a certain market cycle, the price has been accurately predicted before the objective facts occur, which can match the market demand to the maximum extent and avoid potential loss risks. The implementation of dynamic pricing can bring the following benefits to hotels. First, the income has increased substantially. Through the implementation of dynamic pricing, hotels can fully tap the potential revenue space according to the forecast data, and find out the best available price column (the best available rate) through price optimization without increasing the marginal sales cost, so as to maximize the revenue. The second is to achieve a balance between supply and demand. The balance between supply and demand is a difficult problem that often puzzles hotel managers. When the market demand is in a strong period, it is often because the hotel products can't increase the output in a short time, and a part of the income that should have been obtained is lost. When the market supply exceeds demand, they always want to attract more discount customers and increase their income through small profits but quick turnover. Dynamic pricing is precisely the use of price leverage to adjust the balance of supply and demand, which can avoid the above problems to the maximum extent, and achieve the balance of supply and demand through the adjustment of price leverage, thus increasing income. The third is to reserve some rooms and sell them to customers with higher willingness to pay at higher prices. The implementation of dynamic pricing can provide room reservation or reservation service for the most valuable customers and obtain this part of income.

Price optimization is an effective means to maximize the potential revenue space on the basis of hotel differential pricing and dynamic pricing. Hotel managers determine the bars in different market cycles of the hotel through price optimization procedures and sell them to the most valuable customers in order to obtain the maximum income. In the process of price optimization, we should fully consider the factors such as hotel brand, product value, competitor price, customer consumption interest, etc., and use the calculation method of demand price elasticity in economics to determine the elasticity coefficient and find the best available house price. Bars. When determining the price of bars, under normal circumstances, it is necessary to reasonably determine the number of bars in each market cycle in combination with market segments, not as many as possible, generally 3 ~ 5 bars. As BAR is the best saleable house price, the number of rooms reserved or reserved by the most valuable customers can be determined through reservation allocation, which can effectively solve the problem that rooms are reserved for leisure and vacation by discount customers prematurely, and finally sell the reserved or reserved rooms to these most valuable business customers at the best price, thus obtaining higher income.

Four, the room oversold and oversold control

Overbooking refers to the technology of adding a certain number of reservations when the hotel rooms are full or for a certain market segment. Why oversubscribe? This is because most hotels don't set no-display or cancel restrictions for customers who make reservations. Especially in hotels in China, except for big holidays or special prices, there are few additional restrictions to cancel or cancel customers' no-show reservations. If the reserved customer does not show up or cancel the reservation, it will not pay any fees, but it will bring the following resources to the hotel. First, idle and wasted rooms will cause unnecessary economic losses to the hotel; Second, guests who want to stay in this hotel lose the opportunity to stay in the hotel and will turn to competitors' hotels; Thirdly, if the rejected guest later learns that there are no vacancies in the hotel he wants to stay in, it will increase his dissatisfaction with the hotel and may lose a loyal customer from now on. Therefore, it is precisely because of the phenomenon of "no appearance" or "cancellation" that the room overbooking technology came into being. So, how to determine the number of oversubscriptions? Usually, hotel managers will learn from industry experience data and adopt empirical estimation method to determine the number of oversubscriptions. For example, according to the industry experience, the non-appointment rate is usually 3% ~ 5% of the reservation volume, and the cancellation rate is usually 5% ~ 10% of the reservation volume. Then, the oversubscription can generally be estimated as 8% ~ 15% of the reservation. Although the empirical estimation method is sometimes accurate, because the motivation of customers' not coming to the store or canceling is random, there is an error defect caused by randomness that cannot be eliminated. The author believes that the following two calculation methods of oversubscription can effectively eliminate the influence of customer randomness, thus improving the accuracy of oversubscription forecast. One method is based on collecting and capturing the historical non-occupancy rate or cancellation rate of guests over the years, predicting the non-occupancy rate, cancellation rate, number of early check-out rooms and number of delayed entry rooms on a certain day by using moving average method or exponential smoothing method, and calculating the overbooking formula (overbooking value = non-entry room+temporary cancellation room+early check-out room-delayed room) to eliminate fluctuations and random factors to the maximum extent. The second method is to establish a room overbooking model with the help of computer revenue management software, and determine the overbooking quantity by calculating the minimum expected loss. At present, this method has been widely used in civil aviation, hotels, leasing and other industries through computer revenue management system, and has received good results.

However, oversubscription technology is also a skill? A double-edged sword? On the one hand, it can bring benefits to the hotel, on the other hand, it will also bring certain risks. Because the overbooking quantity is determined on the basis of demand forecast, and the forecast can't be 100% accurate, as long as the overbooking strategy is adopted, it is possible to overbook, also known as? Oversold? . The occurrence of overbooking will inevitably bring a large compensation cost to the hotel, which may seriously lead to legal disputes. Therefore, hotels should formulate the following measures to minimize the probability of overbooking.

1) Improve the accuracy of no-show rate prediction as much as possible;

2) Accumulate the experience of oversubscription, adopt the small suboptimal value of oversubscription, and increase the insurance coefficient;

3) Set different levels of prices with different restrictions;

4) Pay attention to setting restrictive clauses when signing a group agreement;

5) Check the reservation list frequently to correct the wrong reservation and duplicate reservation;

6) Communicate regularly with the booking guests or booking distributors to keep abreast of the guests' trends;

7) Take measures such as collecting deposit or asking for credit card guarantee. In case of overbooking, the hotel can upgrade for free, arrange other hotels of the same grade around it, choose the object of voluntarily giving up staying, start the overbooking competition plan and make reasonable compensation.

Verb (abbreviation for verb) capacity control and capacity allocation

Capacity control refers to a control method of distributing appropriate product quantity to customers with different price willingness. In other words, the hotel needs to decide how many rooms to sell at a discounted price and how many rooms should be reserved for high-priced customers who spend late. The effective method to solve this problem is capacity control. Its essence is to determine the corresponding opening or closing price level through capacity allocation technology, and realize the effective allocation of room products at the price level. Its purpose is to meet the consumption needs of customers in various market segments to the greatest extent, not only to ensure the use of discounted customers, but also to reduce the loss of high-priced customers, so as to maximize revenue. The key point of capacity control is how to determine the number of rooms reserved or reserved. If this quantitative value can be found accurately, the problem will be solved. For example, hotels usually have two market segments: leisure guests and business guests. However, holiday guests are limited by vacation time, planning is strong, and they are sensitive to housing prices. Usually, they book in advance in order to get the biggest discount. However, most business guests are not sensitive to room rates, so they usually book late or can pay high prices as uninvited guests. If the number of discount guests is too large, it may occupy the rooms of high-priced guests and lose some income; However, if the number of rooms booked is too large, it will also cause a waste of room resources when the high-priced guests are not full; Therefore, only by reasonably determining the number of reserved rooms and minimizing the loss of high-priced guests or the waste of rooms can we maximize the benefits. In the daily income management, we can adopt the following methods to determine the best number of rooms to be booked, so as to maximize this part of income. First, collect relevant business data over the years, and analyze the booking advance days, conversion rate and structural proportion of daily holiday guests and business guests; At the same time, select a suitable forecasting method, establish a forecasting model for forecasting, and determine the number of reserved houses according to the forecasting results. Secondly, with the help of computer intelligence technology and decision tree method, two ability levels are determined and the ability is allocated. The third is to use Littlewood rule to find out the optimal booking limit of two levels, so as to maximize the expected profit. Capacity control or capacity allocation can effectively solve the problem of hotel managers determining the number of discount rooms and high-priced rooms, and optimize them with actual income.

To sum up, revenue management, as a science, has laid its own theoretical foundation and promoted the rapid development of revenue management system theory on the basis of operational research, marketing, economics, management and information science. Nowadays, with the gradual improvement of revenue management theory and the expansion of practice, it has gradually formed its own system and become an important part of modern management science, which has played an indispensable role in promoting the hotel to maximize revenue.

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