By RevPAR Guru CEO Jean Francois Mourier

Many hoteliers and revenue managers don't know that revenue management in hotels actually developed from the successes of airlines' yield-management practices. I know what you're thinking: 'my hotel doesn't fly, so I can't use the same processes that an airline does. It just doesn't make good business sense. Actually, it does.

 

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Hotels have many of the same issues and challenges that the airlines do: 'perishable inventory, customers booking in advance, lower-cost competition and wide swings with regard to balancing supply and demand. Hotels use the same websites and reservations channels to sell their rooms as airlines do to sell their seats. Hotels have to manage rates and occupancy, just like airlines do. Even the factors that are examined in a successful yield/revenue management practice are the same:

 

1 ­ Number of seats/rooms available?

2 ­ How much time is left to sell the seat/room?

3 ­ What are your competitors charging for the same seat/room?

 

So, if airline yield management and hotel revenue management came from the same source (the airlines) and are based upon many of the same business challenges and pricing factors, then why are the two industries so different today?

 

To be honest, I don't know why the hotel industry hasn't adopted the sophisticated algorithm-based revenue management technology that the airlines have. But I'm willing to give you the benefit of the doubt in that you probably didn't know about how successful the airlines have been using yield management. So I¹m here today to tell you the three lessons that your property can learn from the pricing experts at the airlines.

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