Is anyone successfully using yield management/revenue management

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JerseyBoy

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I am wondering if any folks on the forum have been using revenue management techniques and if they have what types of things have you been doing and are you able to see a defined benefit?
I am looking at things such as:
1. rate adjustments either up or down base on current occupancy
2. rate adjustments either up or down base on rate intelligence tools (Both Expedia and Booking.com now offer free tools to do this)
3. Things like up-selling extra nights at a discounted rate (for example, including on a confirmation e-mail "add and extra night to your reservation and receive 10% off the entire reservation")
I attend many hotel and lodging industry seminars, travel industry seminars, and marketing seminars and this topic is covered a lot and generally the consensus is that it has a positive affect on revenue and profit, but I'm looking to see if anyone in our industry has practical experience that they are willing to share.
 
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.)
 
I've only used it in it's simplest form. I only have 4 rooms, so if I get 3 booked, the last room gets bumped up a little. Every little bit of $ over the year adds up.
 
JerseyBoy said:
3. Things like up-selling extra nights at a discounted rate (for example, including on a confirmation e-mail "add and extra night to your reservation and receive 10% off the entire reservation")
I'm new to online booking in general and have not used these features, but count me as interested in hearing about options and ideas that work.
We have tried to be a nice place at a reasonable rate and only rather recently tried easing rates upward a bit. I feel like my rates need to rise a bit first before offering discounts.
Ideas that would interest me:
A deal for Sunday night or a late checkout on Sunday to help sell a Friday/Saturday
A deal for a prepaid, no refund, Friday/Saturday for certain busy times where folks want to tie up a room long in advance
 
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.).
Morticia said:
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.)
Morticia, interestingly I just had this conversation with my business partner and she doesn't necessarily think having the lowest rate is a problem. I am curious why do you think the lowest price would raise flags? My thinking in this whole exercise is if the lower price is the right price based on market segment and demand at the time then the other inns are overpriced. Just curious what your line of thinking is.
 
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.).
Morticia said:
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.)
Morticia, interestingly I just had this conversation with my business partner and she doesn't necessarily think having the lowest rate is a problem. I am curious why do you think the lowest price would raise flags? My thinking in this whole exercise is if the lower price is the right price based on market segment and demand at the time then the other inns are overpriced. Just curious what your line of thinking is.
.
Ive had this before from guests " you were so cheap we thought there must be something wrong with your place, but we read the reviews and decided to chance it." you don't really want that for your place For me its first page that's fine - don't want to be in a race to the bottom as you get bottom feeders
 
One of my clients uses ThinkReservations, and it adjusts prices up once the Inn gets to a certain occupancy level automatically. She uses it all the time since moving to Think over a year ago, and particularly loves this aspect. It's an option to turn it on, and you set the specifics - occupancy level, days in advance, rate increase.
I personally used the additional night option - we were always booked full for an annual theater festival, and I had a two-night minimum for all four weeks. I allowed guests to add a Tuesday night or Sunday night for 1/2 price. We filled up most Sundays and about 1/2 of the Tuesdays.
 
I've been using Reservation Key's Yield Management feature about a year now. I have it automatically raise the rate $10 if it's the last room available. Doesn't matter if it's 2 months before arrival, or you're arriving today, if there's only 1 room left for that date, you're going to pay $10 more than the usual rate.
Nobody has complained. I doubt many have even noticed.
On my website I list the room rate as $X and up, depending on availability, and tell them to enter their exact dates in ResKey to get the rate for the date(s) of their stay. It has worked well and put, probably, $200 extra in my pocket with no effort required on my part. That's not a lot of money, but for no effort, I can't complain!
 
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.).
Morticia said:
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.)
Morticia, interestingly I just had this conversation with my business partner and she doesn't necessarily think having the lowest rate is a problem. I am curious why do you think the lowest price would raise flags? My thinking in this whole exercise is if the lower price is the right price based on market segment and demand at the time then the other inns are overpriced. Just curious what your line of thinking is.
.
JerseyBoy said:
Morticia, interestingly I just had this conversation with my business partner and she doesn't necessarily think having the lowest rate is a problem. I am curious why do you think the lowest price would raise flags? My thinking in this whole exercise is if the lower price is the right price based on market segment and demand at the time then the other inns are overpriced. Just curious what your line of thinking is.
If you are not looking for lowest price as your basis for selecting a particular property and you see inn x offers pretty much what inn y offers at a $150 discount do you not ask yourself, "what's wrong with inn x?"(It probably depends on your world view - some people would ask who do they think they are at inn y?)
That's what we've heard at the door when I won't come down $50 and I take the guest to the street and point at the place that will give them a room for what they want to pay - what's wrong with that place?
If guests see the going rate for an area is no less than $150 across the board and I'm the place offering rooms at $125 (which seems to be the shoulder season rate that gets zero push back) they think there's a reason I can't GET $150.
Now, if my reviews were excellent, I could charge whatever I wanted and there'd be no questions. But I have guests who hate me so much they write new bad reviews every 6 months under new user names to keep us at the bottom of the list on TA. That does have an impact on sales and guest perceptions.
BTW, I've been inside every inn here in town that plays the same game I do. There are a couple that play by their own rules so I don't count them in my pricing. I know what you're getting at $299/night. As well as the places that are $149/night. We price ourselves based on how much grief are we willing to handle when guests just spent $99 at the beach and are now spending $100 more/night to stay here. We're not super fancy, we're pretty much laid back and not everyone wants to spend close to $200/night excluding taxes if they're not getting gold plated bath fittings. But it is what it is right here in peak season.
 
I use ResNexus's yield management function, and have so since I switched to it.
I have it programmed to raise my rates $10 a night when I'm 60% full, and another $10 when I get down to 2 rooms, and $10 more when I'm down to one.
Two-thirds of my rooms are pet-friendly, and it also bumps those rates $10 when my pet-friendly rooms are 70% full
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Ive occasionally set it to bump my rate for day-of reservations, but I've turned that off for now.
One nice thing about ResNexus's reports package is that it can tell me each month how much extra money I made due to yield management. It averages $90-140 a month depending on the season.
its worth noting that I still get into the system and manually adjust rates based on reservations. I should let the system do it, but habits die hard.
 
I use ResNexus's yield management function, and have so since I switched to it.
I have it programmed to raise my rates $10 a night when I'm 60% full, and another $10 when I get down to 2 rooms, and $10 more when I'm down to one.
Two-thirds of my rooms are pet-friendly, and it also bumps those rates $10 when my pet-friendly rooms are 70% full
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Ive occasionally set it to bump my rate for day-of reservations, but I've turned that off for now.
One nice thing about ResNexus's reports package is that it can tell me each month how much extra money I made due to yield management. It averages $90-140 a month depending on the season.
its worth noting that I still get into the system and manually adjust rates based on reservations. I should let the system do it, but habits die hard..
PhineasSwann said:
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Yes, I have mine set to do that too. I always notice when it does it, and think, what happened! Then remember I set it to do that. It's probably cost me $30 in the months since I started using it, but when occupancy is low just a couple of days from now, I want to attract some business, and I have to think it helps.
 
I use ResNexus's yield management function, and have so since I switched to it.
I have it programmed to raise my rates $10 a night when I'm 60% full, and another $10 when I get down to 2 rooms, and $10 more when I'm down to one.
Two-thirds of my rooms are pet-friendly, and it also bumps those rates $10 when my pet-friendly rooms are 70% full
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Ive occasionally set it to bump my rate for day-of reservations, but I've turned that off for now.
One nice thing about ResNexus's reports package is that it can tell me each month how much extra money I made due to yield management. It averages $90-140 a month depending on the season.
its worth noting that I still get into the system and manually adjust rates based on reservations. I should let the system do it, but habits die hard..
PhineasSwann said:
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Yes, I have mine set to do that too. I always notice when it does it, and think, what happened! Then remember I set it to do that. It's probably cost me $30 in the months since I started using it, but when occupancy is low just a couple of days from now, I want to attract some business, and I have to think it helps.
.
That's something else I'm looking for in my quest for a new system (even tho Gomez is not sure it's worth learning something new at this point) - I want a system that shows a price reduction right on the booking page: $179 now $159.
 
Great comments everyone. I hope they keep coming in. One more item I did not mention in the original post is "Are you selling through OTA's and if so are you pushing out the adjusted rates to them?" In my case the OTA's are significant from a marketing standpoint and by this I mean they are what show up first when people are looking for hotels or any kind of lodging in our area, so having good placement on them matters.
Having said that, is using these types of pricing rules, or changes having any impact on sales through OTA's?
 
I use ResNexus's yield management function, and have so since I switched to it.
I have it programmed to raise my rates $10 a night when I'm 60% full, and another $10 when I get down to 2 rooms, and $10 more when I'm down to one.
Two-thirds of my rooms are pet-friendly, and it also bumps those rates $10 when my pet-friendly rooms are 70% full
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Ive occasionally set it to bump my rate for day-of reservations, but I've turned that off for now.
One nice thing about ResNexus's reports package is that it can tell me each month how much extra money I made due to yield management. It averages $90-140 a month depending on the season.
its worth noting that I still get into the system and manually adjust rates based on reservations. I should let the system do it, but habits die hard..
Phineas,
When you indicate that your report tells you how much extra money you made and the average is $90-140 a month is this just the extra income coming from price increases? I am wondering if it is accounting for additional booking you may be getting when you lower your rate?
 
I use ResNexus's yield management function, and have so since I switched to it.
I have it programmed to raise my rates $10 a night when I'm 60% full, and another $10 when I get down to 2 rooms, and $10 more when I'm down to one.
Two-thirds of my rooms are pet-friendly, and it also bumps those rates $10 when my pet-friendly rooms are 70% full
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Ive occasionally set it to bump my rate for day-of reservations, but I've turned that off for now.
One nice thing about ResNexus's reports package is that it can tell me each month how much extra money I made due to yield management. It averages $90-140 a month depending on the season.
its worth noting that I still get into the system and manually adjust rates based on reservations. I should let the system do it, but habits die hard..
PhineasSwann said:
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Yes, I have mine set to do that too. I always notice when it does it, and think, what happened! Then remember I set it to do that. It's probably cost me $30 in the months since I started using it, but when occupancy is low just a couple of days from now, I want to attract some business, and I have to think it helps.
.
That's something else I'm looking for in my quest for a new system (even tho Gomez is not sure it's worth learning something new at this point) - I want a system that shows a price reduction right on the booking page: $179 now $159.
.
Res key will do that for you
 
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.).
Morticia said:
I'm not religious about it. Example - I don't reduce rates online to pull in more bookings. I do increase rates when certain dates are filling quickly.
The way I look at it is that the money raised with higher rates offsets any discounts repeat guests get.
We do a 'seat of the pants' rate in the shoulder season for walk ins. It generally takes a couple of days to hit the correct 'no hassle' rate. (I don't put that rate online because it would make us the lowest priced inn in town. That raises flags with Bookers.)
Morticia, interestingly I just had this conversation with my business partner and she doesn't necessarily think having the lowest rate is a problem. I am curious why do you think the lowest price would raise flags? My thinking in this whole exercise is if the lower price is the right price based on market segment and demand at the time then the other inns are overpriced. Just curious what your line of thinking is.
.
JerseyBoy said:
Morticia, interestingly I just had this conversation with my business partner and she doesn't necessarily think having the lowest rate is a problem. I am curious why do you think the lowest price would raise flags? My thinking in this whole exercise is if the lower price is the right price based on market segment and demand at the time then the other inns are overpriced. Just curious what your line of thinking is.
If you are not looking for lowest price as your basis for selecting a particular property and you see inn x offers pretty much what inn y offers at a $150 discount do you not ask yourself, "what's wrong with inn x?"(It probably depends on your world view - some people would ask who do they think they are at inn y?)
That's what we've heard at the door when I won't come down $50 and I take the guest to the street and point at the place that will give them a room for what they want to pay - what's wrong with that place?
If guests see the going rate for an area is no less than $150 across the board and I'm the place offering rooms at $125 (which seems to be the shoulder season rate that gets zero push back) they think there's a reason I can't GET $150.
Now, if my reviews were excellent, I could charge whatever I wanted and there'd be no questions. But I have guests who hate me so much they write new bad reviews every 6 months under new user names to keep us at the bottom of the list on TA. That does have an impact on sales and guest perceptions.
BTW, I've been inside every inn here in town that plays the same game I do. There are a couple that play by their own rules so I don't count them in my pricing. I know what you're getting at $299/night. As well as the places that are $149/night. We price ourselves based on how much grief are we willing to handle when guests just spent $99 at the beach and are now spending $100 more/night to stay here. We're not super fancy, we're pretty much laid back and not everyone wants to spend close to $200/night excluding taxes if they're not getting gold plated bath fittings. But it is what it is right here in peak season.
.
Not at the top of TA's list since they began counting the quantiy of reviews as well as quality, but blessed that most reviews are good. I think that over time guests are pleased to find a nice place with a reasonable price and that works in my favor. There are places in town that I don't want to compete with, I don't want their guests, but I get a lot of nice everyday folks by being below the places that jack their rates way up.
 
Great comments everyone. I hope they keep coming in. One more item I did not mention in the original post is "Are you selling through OTA's and if so are you pushing out the adjusted rates to them?" In my case the OTA's are significant from a marketing standpoint and by this I mean they are what show up first when people are looking for hotels or any kind of lodging in our area, so having good placement on them matters.
Having said that, is using these types of pricing rules, or changes having any impact on sales through OTA's?.
My rates on OTA's are higher than any rate on a direct booking. Not sure that answered your question.
Something I just found out is that lonely planet now sells rooms thru booking . com. We're a recommended property on that site so it sucks I'm now going to have to pay to be listed there.
But, again, my rates are higher on an OTA.
 
I manually adjust some rates all the time. They sell too early, I'm too cheap. Sometimes I'm proudest when my rooms are late on the market, I make more money.
 
I use ResNexus's yield management function, and have so since I switched to it.
I have it programmed to raise my rates $10 a night when I'm 60% full, and another $10 when I get down to 2 rooms, and $10 more when I'm down to one.
Two-thirds of my rooms are pet-friendly, and it also bumps those rates $10 when my pet-friendly rooms are 70% full
on the flip side of the coin, it's also programmed to drop my rates $10 when it's less than a week out and I'm less than 20% occupied.
Ive occasionally set it to bump my rate for day-of reservations, but I've turned that off for now.
One nice thing about ResNexus's reports package is that it can tell me each month how much extra money I made due to yield management. It averages $90-140 a month depending on the season.
its worth noting that I still get into the system and manually adjust rates based on reservations. I should let the system do it, but habits die hard..
Phineas,
When you indicate that your report tells you how much extra money you made and the average is $90-140 a month is this just the extra income coming from price increases? I am wondering if it is accounting for additional booking you may be getting when you lower your rate?
.
JerseyBoy said:
Phineas,
When you indicate that your report tells you how much extra money you made and the average is $90-140 a month is this just the extra income coming from price increases? I am wondering if it is accounting for additional booking you may be getting when you lower your rate?
No, it has no way of knowing whether a booking came through because of the lowered rate of it they would have booked anyway. It simply shows me that I generated an extra $150 of revenue through YM rates by displaying those bookings that were at a higher (or lower) rate than the initial rate because of YM.
And to answer another question, yes, I push it through to OTAs. Although right now ResNexus has a known bug that doesn't allow it to push the higher rates to MyAllocator. I've lost a few bucks to this bug and considering how much I'm bitching about it, I expect they'll have it fixed next week just to shut me up.
 
Our deal is we do one night stays during the summer. Only a very select few do here. Word gets around fast, who does. They have to call us for that one night stay and we put them in the room that the other one nighter has, so it frees the other rooms for the longer stays. We add $25 to the price for that one night. The guests are thrilled and we feel better about redoing it so much more often. So far we had only one person get mad about the price jump and said that she'll book it online where its cheaper. I said that it was fine if she did it that way. She called back and took the room at my price when she realized she couldn't get a one night stay online.
We don't do OTAs except for Air. They only charge us 3% and we would have gotten that charge by swiping a card. We have found that Air is sweet to us. Not many inns are on it in our area and those that are not ready to stay in someone's extra bedroom book with us. First it was just college students but now we have all ages including grandparents booking through air. We have it listed under our name instead of the inn's name so it doesn't compete online with our website for guests. I knew this is a-uh-heated topic…. but it works for us.
 
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