Skip to main content

From Yield Management, Revenue Management to Profit Management

Neil Salerno suggested profit management will become the “future” of hotel revenue management. Theories of yield management and revenue management were introduced to the service industry decades ago in helping decision makers manage fixed and perishable capacity. Yield management is about reacting to demands. When demands increase, rates of a hotel room or airline seat go up. Managers in hotels, for example, need to control room prices and allocation of rooms to different market segments according to estimated demands. The goal is to yield a high occupancy and maximize revenue. Often, yield management is also referred to as revenue management in the lodging industry.

According to Neil Salerno, profit management focuses more on “profit” rather than “revenue.” Its goal is to “maximizes gross revenue while optimizing potential room profit.” Under profit management, a hotel may prefer 78% occupancy with an ADR of $94 to 84% occupancy with an ADR of $87. Here, “profit” is the key.

No matter a hotel wants to apply yield management, revenue management, or profit management in operations, managers’ decisions count on a good rate structure, reliable forecasting, and good understanding of the market segments. Do you agree with Neil Salerno that profit management is the future?

References:
Hotel-Online.com: http://tinyurl.com/linchikwok05202010
Picture was downloaded from: http://tinyurl.com/linchikwok05202010P

Comments

Popular posts from this blog

Luxury vs. Millennials and Their Technology: The Ritz-Carlton (By Julia Shorr)

Embodying the finest luxury experience, The Ritz-Carlton Hotel Company, LLC has been established since 1983. In 1998, Marriott International purchased the brand offering it more opportunity for growth while being independently owned and operated. They are known for their enhanced service level as the motto states, “Ladies and Gentlemen serving Ladies and Gentlemen”. The luxury brand now carries 97 hotels and resorts internationally and is attempting to keep the aspects of luxury while keeping up with the trends of the technologically improving generations. The Varying Demographics of the Target Market The Ritz-Carlton’s typical target market includes: business executives, corporate, leisure travelers, typically middle-aged persons and elders, and families from the upper and upper-middle class section of society .   This infers a large range of types of travelers in which all are similar in that they are not opposed to spending extra for the luxurious ambiance. However, with

Is It OK for Hotel Staff to Wear Piercings and Tattoos?

Time has changed. I see more and more college students wearing piercings and tattoos nowadays, but is it OK for hotel staff to wear piercings and tattoos? The answer is “no, no, no.” According a report at USAToday.com, customers across the board do not want to see any hotel workers with pierced eyebrow, pierced tongue, tattooed arm, or nose ring. Some may argue that tattooed and pierced workers may seem more acceptable in edgy boutique hotels as compared to the big franchised hotels, but the survey results did not find any differences among a variety of lodging products. Many respondents believe people who wear visible tattoos and piercings are taking a high risk of their professional lives. If you stay in a hotel, do you mind being served by tattooed and/or pierced staff? What if you are the one who makes the hiring decision? References: USAToday.com: http://tinyurl.com/linchikwok08042010 Picture was downloaded from http://tinyurl.com/linchikwok08042010P

Besides helping the environment, what other benefits can restaurants see from green food packages?

Restaurant curbside pickup evolved from the old-fashioned takeout service and has gained momentum since COVID. Restaurateurs embrace the concept, and consumers want it. Curbside pickup will remain an essential restaurant distribution method even after the pandemic. Do off-premises restaurant services add a burden to the environment? The surge of restaurant off-premises services (curbside pickup, takeout, or delivery) could harm the environment because many retailers use food containers and packages made of plastic for one-time usage. Research shows that our world populations produce 130 million tons of single-use plastic a year (including more than food packages here), but in the U.S., only 8% of all plastic products get recycled. Some restaurants have begun using more sustainable materials in food packaging (e.g., disposable containers). Their efforts deserve a round of applause! Nevertheless, it is unclear if their good deeds can also bring them monetary rewards. For example, can gr