Hotel Front Office Management, 3rd Edition

176 CHAPTER 6: YIELD MANAGEMENTHOSPITALITY PROFILE?Randall graduated from includes all availability in the global distribution system(GDS), a travel agent system, which gives theRandyCornell University’s School ofHotel Administration in 1968. travel agency more ability to sell its rooms. ManyHe served as director of operationsfor Wintergreen Resort in Wintergreen, Virternetsales locations, hoping to avoid commissions,other hotels restrict availability in the GDS and Inginia.He also spent six years with the Sea Pines Resortcompany as director of operations for Palmas rate.and as a result tend to lose overall occupancy anddel Mar resort in Humacao, Puerto Rico; was managerof the Hilton Head Inn; and held a variety of ber of occupied rooms for individual and group busi-He forecasts the desired average rate and the num-other management positions at the Sea Pines resort ness for every day of the year. Once a week, his staffin Hilton Head Island, South Carolina. In 1986, he inputs the actual bookings, and he updates them onmoved to the corporate office as a senior vice presidentof operations at Richfield Hospitality Manage-rate decision for every day—either high, medium,a rolling six-month system. They make a strategicment, Denver, Colorado. In 1994, he became general low, or D (for “disastrous”)—or close out certainmanager of the Eldorado Hotel in Santa Fe, New dates. This gives the hotel’s reservations office theMexico. He is responsible for all aspects of the dayto-dayoperation of the hotel.current bookings and room sales forecast. The yieldflexibility to play a rate game. It factors together theMr. Randall decided to use yield management in management strategy session occurs every week andmanaging his reservation system. He feels yield managementmaximizes revenue at times when demand director of sales and marketing, leisure sales man-includes the general manager, front office manager,is low because it allows the hotel to sell rooms at a ager, and rooms division manager.lower rate and when demand is high because it allowsit to sell rooms at the highest rate. Since 1994, lenges included learning the system and learning toMr. Randall relates that some of the initial chal-the average rate in the hotel has increased by $34.49 rely on it. The staff had to stop second-guessing it.through 2000, with an increase experienced every It took about 90 days to get comfortable with theyear. This represents a 23.3 percent increase. With system, and overall it was relatively painless. Heregard to the Santa Fe, New Mexico, market, it has urges all general managers to adopt yield management.He feels that those who do not use it can’tseen a $6.42 increase for the same period, which represents5.8 percent. The average rate for downtown make effective rate decisions and maximize revenue.Santa Fe properties that are directly competitive to For example, he says that Santa Fe is a destinationthe Eldorado Hotel has increased $20.54, for 15.7 location and he often gives complimentary rooms topercent. He attributes this performance ahead of the meeting planners and charities. But now he doesn’tmarket in large part to the successful implementation give away a room unless he knows there will be oneand consistent use of the yield system. The hotel also available.will check with the food and beverage manager, who will want to determine the availabilityof banquet facilities and food services and the financial implications that mayinfluence the decision. If the decision leans toward rejection of the offer, the assistant salesmanager should consider public relations implications.TLFeBOOK