The term "Yield Management" was first coined in the airline industry and with the
objective to manage the product inventory (seats on a given flight, rooms for a given night),
in such a way as to maximise revenue. In the airline context, "Yield" is expressed in cents per
passenger mile, which is not an appropriate definition to be used for non‐airline
marketeers.Translated into he hotel situation, "Yield" would be defined by $s per guest
room rental time (night, hours) by room type, quite comparable to the retail definition of $s
per square metre per time period.
Preferably Yield Management should be called Revenue Management or Inventory control,
since it is revenue, not (airline) yield to be maximised. Yield or Revenue Management is not
new to Hoteliers, since identical rooms have been sold for premium prices during the high
and peak season and for lower prices during low season and weekends. This was done by
more or less experienced staff with varying talent to anticipate overall demand at certain
days, weeks or periods of the year for a limited supply of rooms. Yield Management (or
Revenue Management) is a discipline appropriate specifically to hotels, but also to many
other sectors of the service industry,‐such as condominiums and mixed use estates‐
operated as hotels.
"Market Segment Pricing" (price differentiation) is combined with statistical analyses to
expand the market for the service and increase the revenue "yield" per available unit of
capacity. It is a set of demand‐forecasting techniques, optimisation models, and
implementation procedures which together determine which reservation requests to accept
and which to reject in order to maximise revenue.
Some academics define "Yield" as the product of occupancy and "Price Efficiency". Price
Efficiency is defined by dividing the average rate sold by the rack rate.
Rack rate: __DOCTEXT__nbsp;200
Occupancy: % 50