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Rate Plans & Yield Management OverviewRDP's yield management system is included as a core module with all RDP software systems. When combined with a careful study of the property's occupancy history and the training of employees, yield management can significantly increase occupancy, average daily rate (ADR) and revenue per available room (REVPAR). Small increases in ADR can drastically increase property profit and value. For example, a 100 room hotel with an ADR of $70.00 grosses $2,555,000 in a year at 100% occupancy. With an ADR of $80.00, the same hotel will gross $2,920,000 an increase of $365,000!
Yield Management ModesThe RDP yield management system can be used in a variety of different ways, including:
Seasonal Rate ChangesMost properties offer different rates for different seasons. Features include:
Automatic Cutoffs for Each SeasonAn automatic cut-off level can be established for each rate plan for every day of the year. Many RDP properties study the past history of the property to determine cutoffs. In periods of historical greater occupancy the rack rate is increased and the discount rates are cut-off. RDP allows up to 9999 different rate plans, each with a different cutoff for each day of the year. The table below shows cutoffs for four rate plans for three days. In this example, the rate plan "corporate" is cutoff for 7/2/2004.
Rate Plans for Groups & WholesalersYield management allows unique rate plans to be established for groups, companies, wholesalers, and net rate travel agents. All reservations for these entities then use the unique rate assigned. This allows reservationists to book reservations quickly with the correct rate and without referring to hand-written tables.
In the example above, Cisco and Ford both use the "AAA" rate. IBM uses the "group" rate, while Microsoft uses a unique rate plan set up just for them. Notice that "flat rates" can be used. In the example above Microsoft has a flat rate of $75/day, regardless of what room type or season is selected. Adjusting Yield ManagementMost customers use the yield management module to establish rate plan cutoffs well in the future. For example they may establish the seasonal rates and cutoffs for the summer during a meeting in January. However these future settings are usually only a "best guess" of what rates to offer on each summer day. To maximize the benefit of RDP yield management, rates and cutoffs must be reviewed frequently. For example, your property may have always sold out on the July 4th weekend, and as a result the only available rate is "rack", and it is set very high. However, as the 4th of July approaches it is critical to monitor actual bookings and make adjustments to available rates based on actual bookings. RDP offers a wide variety of reports to show projected occupancy, including comparisons to the projected occupancy at the same point in time the previous year. (see "enhanced forecasting"). Using these reports the rates and cutoffs can be adjusted to maximize occupancy. One RDP customer has a large airport hotel. On a given day they may have projected only 50% occupancy and therefore have many discount plans available on the yield management screen. However, fog moves into the area and flights are starting to be canceled. The yield manager at the hotel eliminates all discount rates for that day. Several hours later the fog lifts and the airport is fully operational, so the yield manager re-opens the discount plans. This particular customer specializes in
purchasing properties with a low occupancy and ADR. With careful study of the
property's history and RDP's yield management, both occupancy and ADR are
increased and the property is sold at a significant profit in a few years! |