What Is Yield Management 7 Pricing Strategies & Benefits

Yield Management in Hotel Industry: What it is, Importance, Formula and How to Do

Hey there!

Let’s crack the code of yield management strategies in hotels, that nifty trick hotels use to boost their profits.

In this blog, We’re going to debunk the confusion between yield management and revenue management, talk about why it matters, and give you some handy tips to put it to work.

Imagine knowing just when to offer the right price to your guests and taking your earnings to a new level.

Sounds good, right?

This is what yield management pricing is all about,

So, let’s dive in.

What Is Yield Management in Hotel Industry?

Yield management in the hotel industry is a strategic approach that uses dynamic pricing to optimize room rates, minimizing the number of unsold rooms.

This strategy balances supply and demand by aligning prices with guest needs, aiming to maximize both profits and occupancy.

Utilizing real-time data tools for competitor pricing and integrating them into broader business strategies, yield management has evolved into a critical technique for overall revenue enhancement and guest satisfaction.

And, the best thing is, it can be easily calculated, so that you can be sure your yield management strategies are producing results.

Check out, the formula of yield management.

Hotel Yield Management Formula

yield management formula
Yield Management Formula

The simplest formula of yield management is Revenue Achieved/Maximum Profit Potential.

This can be learned through a simple yield management example. Let’s say your hotel has 35 rooms costing $300 each.

This implies that your hotel can maximum earn 1,05,00 (300×35). Assuming that you sold around 17 rooms at the pricing of $200, each, grossing $3400. Your yield is then 3400 divided by 1,05,00 or 32%, which might concern you at the present moment. But it doesn’t justify the bigger picture in the long run.

So, now you have learned how to calculate yield, it’s time to check out what are the benefits of yield management in the hotel industry.

Why Is Yield Management Pricing Important for Hoteliers?

Yield management is super important for hotels because it helps them maximize their revenue by cleverly adjusting room rates based on demand.

This smart approach allows hoteliers to achieve the perfect balance between occupancy and profitability, which is the key to success.

So, basically, yield management pricing is like a secret weapon that helps hoteliers make the most out of every booking opportunity.

How To Employ Hotel Yield Management Pricing Strategy For Your Hotel?

Follow this step by step guide to reap the benefits of yield management for your hotel:

1. Defining Room Rates Based on Occupancy Slabs

First and foremost, you need to set room rates based on your occupancy slabs.

This involves evaluating your past Average Daily Rates (ADRs) and Revenue Per Available Room (RevPAR). I

It’s not just about raising prices when demand is high, but also about understanding what kind of guests are staying at your hotel.

Are they corporate guests, families, solo travelers, or backpackers?

Each guest type may have different price sensitivities and booking patterns, which should be factored into your pricing strategy.

2. Leveraging a Hotel Property Management System (PMS):

Implementing a yield management strategy without a reliable Hotel Property Management System (PMS) can be like navigating without a compass.

Your PMS will help you make sense of all the data, allowing you to track your Key Performance Indicators (KPIs) in real-time.

This instant access to data can empower you to make quicker and more informed decisions about your pricing and yield management strategies.

3. Monitoring Consumer Behavior Trends

Stay one step ahead by monitoring consumer behavior trends.

This not only involves predicting demand but also anticipating needs.

By understanding what your guests want and how their needs change over time, you can offer them tailored experiences.

This can enhance guest satisfaction, leading to repeat bookings and improved online reviews, which, in turn, can boost your occupancy rates and revenue.

4. Utilizing Hotel Price API to Monitor Competitor’s Pricing

When it comes to staying competitive in the hospitality industry, monitoring your competitor’s rates is crucial.

But you don’t have to do it manually. With MakCorps Hotel Rates API, this task becomes a breeze.

MakCorps API provides access to hotel pricing data from over 200 online travel agencies.

Makcorps Price API

This way you can keep a close eye on your competitors’ pricing strategies.

With real-time rate comparison data, you’ll understand how your hotel is positioned in the market and make strategic decisions to remain competitive.

So, what are you waiting for?

5. Recognizing When to Adjust Room Prices:

Yield management isn’t a set-and-forget strategy.

It requires you to continually monitor and adjust your room prices based on a variety of factors.

These factors could include changes in demand, guest behavior trends, your competitors’ pricing, or even larger economic trends.

The key here is flexibility and responsiveness.

A successful yield management strategy can help you identify your most profitable bookings and make the most of current demand to maximize revenue.

So, now you know how to get started with setting a yield management pricing strategy for your hotel. If you’re still, thinking it’s the same as revenue management. Let’s check out the difference.

What Is the Difference Between Yield Management & Revenue Management?

Although Yield Management and Revenue Management sounds like a similar term, but its completely different.

Yield Management in hotel industry is a focused strategy, specifically optimizing the balance between your hotel room’s supply and demand. It uses actual customer data to adjust pricing, aiming to maximize bookings at the best price. It’s like a piece of a larger puzzle, which is Revenue Management.

On the other hand, Hotel Revenue Management is an all-encompassing strategy. It predicts consumer behavior, forecasts demands, and optimizes prices across all products and services which influences all business processes and financial decisions.

In short, Yield Management is for adjusting room rates, while Revenue Management takes a holistic view to maximizing profitability across the entire hotel.

What Are The Challenges Hoteliers Face Through Yield Management?

One of the major challenges that hoteliers face in yield management is that since decisions are driven by numbers and forecasts, there is no preferential treatment for regular customers.

Prices keep on changing according to season and demands and don’t hold any special privileges for the regular guests.

Another challenge is that since the yield management pricing strategy is solely focused on increasing the profits of hotel owners, it doesn’t take customer expectations into consideration.

Also, there is always a possibility of not forecasting well.

For the forecast, hotels must gather data, organize it, and coordinate with the revenue managers to implement it effectively into the pricing system.

Beyond just pricing information, you’ll also need data on hotel availability, reviews, and booking details to support thorough analysis and decision-making. Take a look at this list of hotel API providers that offers a full range of hotel data you need.

However, there are a number of factors that come into play that can jeopardize the forecast thereby affecting revenue.

Thus, there is a possibility that the yield management strategy might not hold up well against the actual market trends.

Frequently Asked Questions:

The difference between yield management and dynamic pricing is:

Yield management is a broader pricing strategy that includes a range of techniques designed to optimize revenue which also includes dynamic pricing. On the other hand, a dynamic pricing strategy is a practice of adjusting prices in real-time based on changes in market conditions and demand.


Yield management pricing strategy is a game-changer for hotels, boosting profits by smartly balancing supply, demand, and pricing.

It’s not just about filling rooms, but doing it strategically to maximize earnings. With tools like a robust PMS and MakCorps Hotel Rates API, you can optimize your strategies and stay competitive.

Remember, it’s not a one-time deal but a dynamic process requiring regular updates.

So, embrace the power of yield management and watch your hotel’s profitability soar.

Don’t let the challenges hold you back, the benefits are worth it.

Now it’s your turn to crack the code of yield management and take your hotel business to the next level.

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