Establishing a Yield Management Program:
Know your numbers – trying yield management without an effective system is a catastrophe
•Know how many units you have of each rate type and size
•Know your average occupancy rates from the past and avg. ADR
•Know where your current bookings are falling and in what unit types
•Know your average lead time – it changes from season to season!
•Know the booking lead times from different marketing avenues
•Repeat guests typically book farther out than new guests
•Guests who book directly with the establishment generally have a longer lead time
•Wholesalers or External Websites provide the shortest lead time – use them for aggressive yield management
•Know what your competition is selling your units at – rate shop and know their business plan – who pays the clean? Do they have damage waiver rolled in? Are their rates broken out?
•Know your limits – what does your contract say?
•Know your costs of doing business – are your other departments a loss? If so – then rework your fees before doing yield management – accepting a booking at a lower rate should never cost you money – it should either be at a slight profit or wash.
Do not believe that yield management only utilizes discounting –
•Add extra amenities for free
•Be creative with your offer – if they made other arrangements and would prefer to stay with you – offer to pay their cancellation fee with a limit
•Change your cancellation policy to make it easier to book without a deposit
•Open up your booking window to same day arrival with wholesalers
•Increase the amount of inventory you provide to wholesalers without discounting the rate if they have been booking your rooms at your normal ADR but have just run out of rooms.
•If they still have inventory left and you are within your normal booking window then consider dropping the rate. Many wholesale providers can automate this process within your comfort limits (i.e. always take 15% off within three days of arrival)
•If your wholesaler has inventory left and you are sold out or you’re close – then DO NOT discount with them and negotiate getting your units back to sell internally. If you have a good relationship with the company and your program is effective – this should not be an issue.
More notes on working with OTA’s (Online Travel Agents) ….
•Get rid of your nightly minimum requirements if possible
•If you see a time frame that is selling like hot cakes – use yield management to INCREASE the rates! This goes both ways!
•Never guarantee a specific room for guests that book through third-party providers – only guarantee room types – use your condos and multiple similar homes to “bump and jive” like a hotel.
INTERNAL ADJUSTMENTS
MOST IMPORTANT – Do NOT be afraid of your owners
•There is no “principal” in sitting empty – literally
•Teach your entire staff about your Yield Management Plan - Owners interact with everyone and everyone should be confident in the direction your business is taking and be able to communicate the reasoning behind the yield management rates to the owners – if the owner’s sense that you are unsure of how to explain the low rate – they will lose confidence in your ability to market their unit instead of believing that what you are doing is amazingly innovative and aggressive – PLUS THIS TAKES A LOT OF WORK – tell them that!
•Make sure that ANY bookings completed with Yield Management have a unique booking type or source, for example:
Instead of LLINK and your source code (for regular leisurelink bookings) you should make a secondary code – YLLINK to designate it was a booking made within a few days of arrival under your yield management plan – it will help your owners differentiate and make tracking your numbers and success extremely organized. Different wholesalers are effective at different rates – find out which ones yield the highest number of bookings and which ones maintain the highest ADR without sacrificing effectiveness.
Be proactive with your owners – when you are comfortable with your Yield Management Program and put it in place – send your owners a newsletters and explain to them that you are going to use this new system to maximize their rental potential and occupancy during a time where they typically sit empty.
NEVER – Panic and discount further out than your average lead time for a booking – timing is everything!
•Track the effectiveness of your discounts or specials – does 10% yield as many bookings as 15%?
•NEVER – Discount during time periods that historically sell out or already have very high occupancy – hold out on these time periods unless there are obvious external conditions that will make it difficult to book this time period.
•DO NOT – Advertise your yield management rate in a bold way – do whatever you can to make this rate blind (only offer it over the phone or through wholesalers or utilize bidding – uphold the ultimate rate stability on your own website)
•NEVER eat the costs of doing business – break your rates and fees apart and only utilize yield management with the rent portion of your rates
•Do not believe that a high volume of bookings is a real indication of success – if you get a ton of bookings at a discounted rate during a time that your entire region is at a high occupancy – then you probably discounted too early or too much – real success can be measured by increasing your average occupancy throughout the entire year and filling in the time periods that usually sit empty.
