Welcome to the Revenue/Yield Management - Microsoftescapiacustomer.blob.core.windows.net/media/... · What is Yield Management? Yield management, also known as revenue management,

Welcome to the

Revenue/Yield Management Escapia Customer Seminar

Welcome to theWelcome to the

Revenue/Yield Management Revenue/Yield Management Escapia Customer SeminarEscapia Customer Seminar

John J. SuzukiEscapia, Inc.Seattle, WA

John J. SuzukiJohn J. SuzukiEscapia, Inc.Escapia, Inc.Seattle, WASeattle, WA

Welcome Escapia Customers!Welcome Future Escapia Customers!

Welcome Partners!Welcome Competitors! ☺

Welcome Friends!

Welcome Escapia Customers!Welcome Escapia Customers!Welcome Future Escapia Customers!Welcome Future Escapia Customers!

Welcome Partners!Welcome Partners!Welcome Competitors! Welcome Competitors! ☺☺

Welcome Friends!Welcome Friends!

Welcome!Welcome!Welcome!

We’re here for Escapia clients to to discuss the “whats” and the “whys” of Yield Management.WeWe’’re here for Escapia clients to to discuss the re here for Escapia clients to to discuss the ““whatswhats””

and the and the ““whyswhys””

of Yield Management.of Yield Management.

Why We’re HereWhy WeWhy We’’re Herere Here

The One‐Click Advantage with EscapiaThe OneThe One‐‐Click Advantage with EscapiaClick Advantage with Escapia

EscapiaVRS FoundationSoftware That’s Just the Beginning

EscapiaVRS FoundationEscapiaVRS FoundationSoftware ThatSoftware That’’s Just the Beginnings Just the Beginning

EscapiaNET Marketing and Distribution Helping Guests Find You

EscapiaNET Marketing and DistributionEscapiaNET Marketing and Distribution Helping Guests Find YouHelping Guests Find You

Escapia Guest ReviewsHelping Guests Know & Trust You

Escapia Guest ReviewsEscapia Guest ReviewsHelping Guests Know & Trust YouHelping Guests Know & Trust You

Escapia Yield ManagementThe Right Rates at the Right Time

Escapia Yield ManagementEscapia Yield ManagementThe Right Rates at the Right TimeThe Right Rates at the Right Time

What is it?Why is it important?Why does it work?

Who does it?How it worksExamples

Implementing it

What is it?What is it?Why is it important?Why is it important?Why does it work?Why does it work?

Who does it?Who does it?How it worksHow it worksExamplesExamples

Implementing itImplementing it

Agenda: Yield Management (aka

Revenue Management)

Agenda: Yield ManagementAgenda: Yield Management ((akaaka

Revenue Management)Revenue Management)

What is Yield Management?What is Yield Management?What is Yield Management?

Yield management, also known as revenue management, is the

process of understanding, anticipating and influencing consumer

behavior

in order to maximize revenue

or profits

from a fixed,

perishable resource (such as airline seats or hotel room reservations).

The challenge is to sell the right resources to the right customer at the

right time for the right price. This process can result in price

discrimination, where a firm charges customers consuming otherwise

identical goods or services a different price for doing so.

‐

Source: Wikipedia

Yield managementYield management, also known as , also known as revenue managementrevenue management, is the , is the

process of understanding, anticipating and influencing process of understanding, anticipating and influencing consumerconsumer

behaviorbehavior

in order to maximize in order to maximize revenuerevenue

or or profitsprofits

from a fixed, from a fixed,

perishable resource (such as airline seats or hotel room reservaperishable resource (such as airline seats or hotel room reservations). tions).

The challenge is to sell The challenge is to sell the right resources to the right customer at the the right resources to the right customer at the

right time for the right priceright time for the right price. This process can result in . This process can result in price price

discriminationdiscrimination, where a firm charges customers consuming otherwise , where a firm charges customers consuming otherwise

identical goods or services a different price for doing so. identical goods or services a different price for doing so. ‐‐

Source: Source: WikipediaWikipedia

http://en.wikipedia.org/wiki/Consumer

http://en.wikipedia.org/wiki/Behavior

http://en.wikipedia.org/wiki/Revenue

http://en.wikipedia.org/wiki/Profit_(economics)

http://en.wikipedia.org/wiki/Price_discrimination

http://en.wikipedia.org/wiki/Price_discrimination

What is Yield Management?What is Yield Management?What is Yield Management?

“The core concept of yield management is to provide the right service

to the right customer at the right time for the right price. That concept

involves careful definition of service, customer, time, and price…

Price

can be set according to the timing of the service, the timing of

the

reservation, the type of service, or according to other rules

that seem

appropriate…

The ideal outcome of a revenue management strategy is

to match customers' time and service characteristics to their

willingness to pay‐ensuring that the customer acquires the desired

service at the desired time at an acceptable price, while the

organization gains the maximum revenue possible given the customer

and business characteristics.“

‐

Glenn Withiam, Cornell University

““The core concept of yield management is to provide The core concept of yield management is to provide the right service the right service

to the right customer at the right time for the right priceto the right customer at the right time for the right price. That concept . That concept

involves careful definition of service, customer, time, and pricinvolves careful definition of service, customer, time, and pricee……

PricePrice

can be set according to the timing of the service, the timing ofcan be set according to the timing of the service, the timing of

the the

reservation, the type of service, or according to other reservation, the type of service, or according to other rulesrules

that seem that seem

appropriateappropriate……

The ideal outcome of a revenue management strategy is The ideal outcome of a revenue management strategy is

to match customers' time and service characteristics to their to match customers' time and service characteristics to their

willingness to paywillingness to pay‐‐ensuring that the customer acquires the desired ensuring that the customer acquires the desired

service at the desired time at an acceptable price, while the service at the desired time at an acceptable price, while the

organization gains the maximum revenue possible given the customorganization gains the maximum revenue possible given the customer er

and business characteristics.and business characteristics.““

‐‐

Glenn Glenn WithiamWithiam, Cornell University, Cornell University

Why is Yield Management Important?Why is Yield Management Important?Why is Yield Management Important?

•

Competitive edge, especially in this “New Economy”•

Maximize revenues and per vacation home nights• Don’t under price or overprice

• Strategic tool against RBOs.• Shorter Stays: 3 in 5 vacations < one week in duration. • Shorter notice on advanced bookings.• The Internet has enabled the “information power structure”

to shift to the consumer’s advantage.• Key Point:

Once the date has passed, you can’t sell it anymore.

•• Competitive edge, especially in this Competitive edge, especially in this ““New EconomyNew Economy””•• Maximize revenues and per vacation home nightsMaximize revenues and per vacation home nights

•• DonDon’’t under price or overpricet under price or overprice•• Strategic tool against Strategic tool against RBOsRBOs..•• Shorter Stays: 3 in 5 vacations < one week in duration. Shorter Stays: 3 in 5 vacations < one week in duration. •• Shorter notice on advanced bookings.Shorter notice on advanced bookings.•• The Internet has enabled the The Internet has enabled the ““information power structureinformation power structure””

to shift to the consumerto shift to the consumer’’s advantage.s advantage.•• Key Point:Key Point:

Once the date has passed, you canOnce the date has passed, you can’’t sell it anymore.t sell it anymore.

Day

s aw

ay fr

om

hom

e

1980 2003 2005

“Homeowners who use VRMCs

[vacation rental

management companies] value the convenience and

service, but only one in five feel they are getting a good

value”

‐

Source: PhoCus

Wright Vacation Rentals Study, October 2008

““Homeowners who use Homeowners who use VRMCsVRMCs

[vacation rental [vacation rental

management companies] value the convenience and management companies] value the convenience and

service, but service, but only one in five feel they are getting a good only one in five feel they are getting a good

valuevalue””‐‐

Source: Source: PhoCusPhoCus

Wright Vacation Rentals Study, October 2008Wright Vacation Rentals Study, October 2008

Why Yield Management WorksWhy Yield Management WorksWhy Yield Management Works

1.

Consumers make decisions based on price, policy and promotions.• Price: Travel is a highly price sensitive category.

The Web has taken the friction

out of comparison price shopping.

•

Policy: Minimum nights stays, Saturday‐to‐Saturday stays, payment schedules…• Promotions: Consumers react to deals and like to feel like they won.

2.

Consumers booking through different channels have different attitudes.• Walk ins may be less likely to do comparison price shopping because it is more

time consuming.

• Web directory shoppers may be highly price sensitive – you are competing side by

side with hundreds or thousands of other homes for their attention.

1.1.

Consumers make decisions based on price, policy and promotions.Consumers make decisions based on price, policy and promotions.••

PricePrice: Travel is a highly price sensitive category.: Travel is a highly price sensitive category.

The Web has taken the friction The Web has taken the friction

out of comparison price shopping.out of comparison price shopping.

••

PolicyPolicy: Minimum nights stays, Saturday: Minimum nights stays, Saturday‐‐toto‐‐Saturday stays, payment schedulesSaturday stays, payment schedules……••

PromotionsPromotions: Consumers react to deals and like to feel like they won.: Consumers react to deals and like to feel like they won.

2.2.

Consumers booking through different channels have different attiConsumers booking through different channels have different attitudes.tudes.••

Walk ins may be less likely to do comparison price shopping becaWalk ins may be less likely to do comparison price shopping because it is more use it is more

time consuming.time consuming.

••

Web directory shoppers may be highly price sensitive Web directory shoppers may be highly price sensitive ––

you are competing side by you are competing side by

side with hundreds or thousands of other homes for their attentiside with hundreds or thousands of other homes for their attention.on.

Why Yield Management Works (Cont’d)Why Yield Management Works (ContWhy Yield Management Works (Cont’’d)d)

3.

All room/home nights aren’t equally valuable to consumers – even when

they are in the same home.

• A night in a home on Hilton Head Island in June isn’t the same as one in the exact

same home in December.

• A night in a Tahoe cabin on a Saturday night in January is a lot

more valuable than

a night in the same cabin on a Wednesday night in January.

• A night in a home on the Big Island of Hawaii during Ironman

is a lot more valuable

than a home night in the same home once Ironman

is over.

4.

The probability of selling a home night changes as situations change and

time moves on.

• The odds of selling a home night with two weeks left before a travel date is less

than three months before a travel date.

•

Cancellations can leave a home night suddenly unsold with little

time left to sell it.• Two bookings book ending a limited number of consecutive home nights change

the likelihood of selling those home nights.

3.3.

All room/home nights arenAll room/home nights aren’’t equally valuable to consumers t equally valuable to consumers ––

even when even when

they are in the same homethey are in the same home..•

A night in a home on Hilton Head Island in June isn’t the same as one in the exact

same home in December.

•

A night in a Tahoe cabin on a Saturday night in January is a lot

more valuable than

a night in the same cabin on a Wednesday night in January.

•

A night in a home on the Big Island of Hawaii during Ironman

is a lot more valuable

than a home night in the same home once Ironman

is over.

4.

The probability of selling a home night changes as situations change and

time moves on.•

The odds of selling a home night with two weeks left before a travel date is less

than three months before a travel date.

•

Cancellations can leave a home night suddenly unsold with little

time left to sell it.•

Two bookings book ending a limited number of consecutive home nights change

the likelihood of selling those home nights.

Who Does Yield Management?Who Does Yield Management?Who Does Yield Management?

AirlinesCar RentalsHotels

Cruise Lines

AirlinesAirlinesCar RentalsCar RentalsHotelsHotels

Cruise LinesCruise Lines

Almost every other segment of travel…Almost every other segment of travelAlmost every other segment of travel……

Source: Escapia and Hawaii Department of

Business, Economic Development and Tourism.

Hawaii Occupancy Comparison- Hotels versus Vacation Rentals -Hawaii Occupancy Comparison

- Hotels versus Vacation Rentals -

0%10%20%30%40%50%60%70%80%90%

100%

Janu

ary

Febr

uary

Mar

ch

Apr

il

May

June July

Aug

ust

Sept

embe

r

Oct

ober

Nov

embe

r

Dec

embe

r

Occ

upan

cy R

ate

Hawaii VRsHawaii Hotels

Drive Value by Managing RatesDrive Value by Managing Rates

The Web: The Ultimate Deal MakerThe Web: The Ultimate Deal MakerThe Web: The Ultimate Deal Maker

The Vacation Rental industry is lagging behind…WHY?The Vacation Rental industry is lagging behindThe Vacation Rental industry is lagging behind……WHY?WHY?‐

Lack of automated supply and demand pricing‐‐

Lack of automated supply and demand pricingLack of automated supply and demand pricing

I paid $10,000 for

my vacation week!

I paid $10,000 for

my vacation week!I paid $3,500 for my

vacation week!

I paid $3,500 for my

vacation week!

Drive Value by Managing RatesDrive Value by Managing RatesDrive Value by Managing Rates

Consumers Respond to Promotions & DealsConsumers Respond to Promotions & DealsConsumers Respond to Promotions & Deals

• Web traffic on Expedia sites dropped 16%• Travelocity’s traffic dropped 16%• Orbitz’s

traffic dropped 23%

• Priceline’s traffic increased 24%• Kayak’s traffic increased 93%

• Web traffic on Expedia sites dropped 16%• Travelocity’s traffic dropped 16%• Orbitz’s

traffic dropped 23%

• Priceline’s traffic increased 24%• Kayak’s traffic increased 93%

“It shouldn’t be a surprise that Web sites offering comparison‐shopping (Kayak)

or allow

customers to make their own bid (Priceline) would be popular in a tough economy. It kind

of makes Orbitz’s

take‐it‐or‐leave‐it price seem antiquated and inflexible.” – BNET Travel

“It shouldn’t be a surprise that Web sites offering comparison‐shopping (Kayak)

or allow

customers to make their own bid (Priceline) would be popular in a tough economy. It kind

of makes Orbitz’s

take‐it‐or‐leave‐it price seem antiquated and inflexible.” – BNET Travel

Nearly half of travelers are booking their 2009 trips

later than in previous years to take advantage of last‐

minute deals and other concessions.

Nearly half of travelers are booking their 2009 trips

later than in previous years to take advantage of last‐

minute deals and other concessions.

http://images.google.com/imgres?imgurl=http://farm1.static.flickr.com/1/185873726_de56497976.jpg&imgrefurl=http://flickr.com/photos/reivax/185873726/&usg=__C6cqepCx3mw9scnfdNxoqIjDN-Y=&h=405&w=500&sz=187&hl=en&start=56&tbnid=v5_8UOYcWun-OM:&tbnh=105&tbnw=130&prev=/images%3Fq%3Dselectric%26gbv%3D2%26ndsp%3D20%26hl%3Den%26sa%3DN%26start%3D40

Last Minute Deals On the RiseLast Minute Deals On the RiseLast Minute Deals On the Rise

Stringing together a series of “if / then”

rules:

If……a customer is booking nine months ahead/two days ahead…a customer is a travel agent/an owner referral/a group booking…a customer is booking a Wednesday night stay/a spring break rental …a customer is booking a 14 day stay/a two day stay…your occupancy rate is 20%/90%.

Then……Reduce the rate per night by 10%/increase the rate by 15%…Increase / reduce the rate by $100 for the whole stay.…Set the rate to $99 per night / $129 per night.…Set the pet surcharge to $0 / Increase the pet fee by 30%.…Reduce the price of the last night by 50% / Include the last night free.

Stringing together a series of Stringing together a series of ““if / thenif / then””

rules:rules:

IfIf…………a customer is booking nine months ahead/two days aheada customer is booking nine months ahead/two days ahead……a customer is a travel agent/an owner referral/a group bookinga customer is a travel agent/an owner referral/a group booking……a customer is booking a Wednesday night stay/a spring break renta customer is booking a Wednesday night stay/a spring break rental al ……a customer is booking a 14 day stay/a two day staya customer is booking a 14 day stay/a two day stay……your occupancy rate is 20%/90%.your occupancy rate is 20%/90%.

ThenThen…………Reduce the rate per night by 10%/increase the rate by 15%Reduce the rate per night by 10%/increase the rate by 15%……Increase / reduce the rate by $100 for the whole stay.Increase / reduce the rate by $100 for the whole stay.……Set the rate to $99 per night / $129 per night.Set the rate to $99 per night / $129 per night.……Set the pet surcharge to $0 / Increase the pet fee by 30%.Set the pet surcharge to $0 / Increase the pet fee by 30%.……Reduce the price of the last night by 50% / Include the last nigReduce the price of the last night by 50% / Include the last night free.ht free.

How Yield Management WorksHow Yield Management WorksHow Yield Management Works

Implementing Yield Management‐

Some Examples ‐


Some Examples ‐

1.

Premiums/Discounts Based on OccupancyIf occupancy > 70%, increase rates by 15%. If < 40%, decrease rates by 19%.

2.

Last Minute DealsIf booked within 15 days of arrival, 10% discount. If 7 days prior, 15% discount.

3.

Premiums/Discounts Based on Guest TypeIf guests of owners, 20% discounts. If travel agent, 10% premium.

4.

Holiday Premiums/DiscountsIf booked for Christmas week, increase rate by $100 per night.If booked within one week, decrease rate by 12%.

5.

Separate Rates Based on Source of BookingIf web booking, reduce rates by 5%If call‐ins or walk‐ins, increase rates by 5%.

6.

Special Pet Fees (at front desk)If big dog , increase pet fee by $30.If dog can shake hands, reduce pet fee by 25%

1.

Premiums/Discounts Based on OccupancyIf occupancy > 70%, increase rates by 15%. If < 40%, decrease rates by 19%.

2.

Last Minute DealsIf booked within 15 days of arrival, 10% discount. If 7 days prior, 15% discount.

3.

Premiums/Discounts Based on Guest TypeIf guests of owners, 20% discounts. If travel agent, 10% premium.

4.

Holiday Premiums/DiscountsIf booked for Christmas week, increase rate by $100 per night.If booked within one week, decrease rate by 12%.

5.

Separate Rates Based on Source of BookingIf web booking, reduce rates by 5%If call‐ins or walk‐ins, increase rates by 5%.

6.

Special Pet Fees (at front desk)If big dog , increase pet fee by $30.If dog can shake hands, reduce pet fee by 25%


More Complex Examples ‐


More Complex Examples ‐

1.

If

we are 90%+ booked and

the booking is for 60 or more days from

now then

increase the rate by 20%.

2.

If

the renter is an owner referral and

the booking is not for Friday

or Saturday night, then

reduce the rate by $50 per night.

3.

If

the renter is a walk‐in and

the booking is for a Friday night, then


4.

If

the unit is an oceanfront unit and

the booking is for an arrival

date in August and

the booking date is less than six months from

now but

more than one month from now, then

increase the rate by

$75 per night.

1.

If

we are 90%+ booked and

the booking is for 60 or more days from

now then


2.

If

the renter is an owner referral and

the booking is not for Friday

or Saturday night, then

reduce the rate by $50 per night.

3.

If

the renter is a walk‐in and

the booking is for a Friday night, then


4.

If

the unit is an oceanfront unit and

the booking is for an arrival

date in August and

the booking date is less than six months from

now but

more than one month from now, then

increase the rate by

$75 per night.

An Example:Rent = $1,000 Your Commission: 20%Discount: 25%

An Example:An Example:Rent = $1,000 Rent = $1,000 Your Commission: 20%Your Commission: 20%Discount: 25%Discount: 25%

Yield Management Commissions ‐

Don’t Work for Free ‐

Yield Management Commissions Yield Management Commissions ‐‐

DonDon’’t Work for Free t Work for Free ‐‐

One WayTake it out of your commissions:

Rent:

$1,000Gross Commissions:

$ 200Less Discount:

$ 250Your Net Commission: ‐

$ 50Net to Owner:

$ XXX

One WayOne WayTake it out of your commissions:Take it out of your commissions:

Rent:Rent:

$1,000$1,000Gross Commissions: Gross Commissions:

$ 200$ 200Less Discount:Less Discount:

$ 250$ 250Your Net Commission: Your Net Commission: ‐‐

$ 50$ 50Net to Owner:Net to Owner:

$ XXX$ XXX

The Difference in Commission to You:

$200The Difference in Commission to You: The Difference in Commission to You:

$200$200

A Better WayDiscount the Rent:

Rent:

$1,000Less Discount:

$ 250Total Rent

$ 750Your Net Commission: $ 150Net to Owner:

$ 600

A Better WayA Better WayDiscount the Rent:Discount the Rent:

Rent:Rent:

$1,000$1,000Less Discount:Less Discount:

$ 250$ 250Total RentTotal Rent

$ 750$ 750Your Net Commission: $ 150Your Net Commission: $ 150Net to Owner:Net to Owner:

$ 600$ 600

“Is a little bit of something

better than a whole lot of nothing?”

““Is a little bit of something Is a little bit of something

better than a whole lot of nothing?better than a whole lot of nothing?””

The Question for your Owners:The Question for your Owners:The Question for your Owners:

On the other hand….On the other handOn the other hand……..

An Example:Rent = $1,000Your Commission: 20%Premium: 25%

An Example:An Example:Rent = $1,000Rent = $1,000Your Commission: 20%Your Commission: 20%Premium: 25%Premium: 25%

Share Premium

Rates with Owners Too!Share Share PremiumPremium

Rates with Owners Too!Rates with Owners Too!

One WayAdd it to your commissions:

Rent:

$1,000Gross Commissions:

$ 200Plus Premium:

$ 250Your Net Commission: $ 450???Net to Owner:

$ 800???

One WayOne WayAdd it to your commissions:Add it to your commissions:

Rent:Rent:

$1,000$1,000Gross Commissions: Gross Commissions:

$ 200$ 200Plus Premium:Plus Premium:

$ 250$ 250Your Net Commission: Your Net Commission: $ 450???$ 450???Net to Owner:Net to Owner:

$ 800???$ 800???

The Difference in Commission to You: $50 The Difference in Owner Income: $200!!The Difference in Commission to You: $50 The Difference in Commission to You: $50 The Difference in Owner Income: $200!!The Difference in Owner Income: $200!!

A Better WayAdd it to the Rent:

Rent:

$1,000Plus Premium:

$ 250Total Rent

$1,250Your Net Commission: $ 250Net to Owner:

$1,000

A Better WayA Better WayAdd it to the Rent:Add it to the Rent:

Rent:Rent:

$1,000$1,000Plus Premium:Plus Premium:

$ 250$ 250Total RentTotal Rent

$1,250$1,250Your Net Commission: $ 250Your Net Commission: $ 250Net to Owner:Net to Owner:

$1,000$1,000

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180

Total Monthly Rent: $4,320Total Occupancy: 77%Average Daily Rent: $ 180Total Bookings:

4

Total Monthly Rent: $4,320Total Monthly Rent: $4,320Total Occupancy: 77%Total Occupancy: 77%Average Daily Rent: $ 180Average Daily Rent: $ 180Total Bookings:Total Bookings:

44

Without Dynamic RatesWithout Dynamic RatesWithout Dynamic Rates


1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180


4


44


With Dynamic RatesWith Dynamic RatesWith Dynamic RatesSunday Monday Tuesday Wednesday Thursday Friday Saturday

1 2 3 4 5 6 7

x x x x x x x

8 9 10 11 12 13 14

x x x x x x x

15 16 17 18 19 20 21

x x x x x x x

22 23 24 25 26 27 28

x x x x x x x

29 30 31

x x x

Starts off as an open month…Starts off as an open monthStarts off as an open month……


1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180


4


44



1 2 3 4 5 6 7

x x x x x x $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x x

22 23 24 25 26 27 28

x x x x x x x

29 30 31

x x x

One “Standard Week”

is booked…One One ““Standard WeekStandard Week””

is bookedis booked……


1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180


4


44



1 2 3 4 5 6 7

$215 $215 $215 x x x $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x $215 $215 $215 $215

22 23 24 25 26 27 28

$215 x x x x x x

29 30 31

x x x

Rate Rule: If the stay does notstart on a Saturday, is over a weekend and is 4 to 7 days, then increase the rate to $215 per night.

Rate Rule: If the stay does notRate Rule: If the stay does notstart on a Saturday, is over a start on a Saturday, is over a weekend and is 4 to 7 days, weekend and is 4 to 7 days, then increase the rate to $215 then increase the rate to $215 per night.per night.


1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180


4


44


With Dynamic RatesWith Dynamic RatesWith Dynamic RatesRate Rule: If the stay is over aweekend and is 3 days or less,then increase the rate to $235 per night.

Rate Rule: If the stay is over aRate Rule: If the stay is over aweekend and is 3 days or less,weekend and is 3 days or less,then increase the rate to then increase the rate to $235 per night.$235 per night.


1 2 3 4 5 6 7

$215 $215 $215 x x x $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x $215 $215 $215 $215

22 23 24 25 26 27 28

$215 x x x x $235 $235

29 30 31

$235 x x


1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180


4

Total Monthly Rent: $4,320Total Monthly Rent: $4,320Total Occupancy: 77%Total Occupancy: 77%Average Daily Rent: $ 180Average Daily Rent: $ 180Total Bookings: Total Bookings:

44



1 2 3 4 5 6 7

$215 $215 $215 x x x $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 $160

15 16 17 18 19 20 21

$160 $160 $160 $215 $215 $215 $215

22 23 24 25 26 27 28

$215 x x x x $225 $225

29 30 31

$225 x x

Rate Rule: If the stay is over aweekend and is 5 days or less,and booking is made within 14 days of the stay, decrease rate to $160 per night.

Rate Rule: If the stay is over aRate Rule: If the stay is over aweekend and is 5 days or less,weekend and is 5 days or less,and booking is made within 14 and booking is made within 14 days of the stay, decrease rate days of the stay, decrease rate to $160 per night.to $160 per night.


1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180


4


44


With Dynamic RatesWith Dynamic RatesWith Dynamic RatesRate Rule: If the stay is M‐F and is 5 days or less, and booking is made within 10 days of the stay,decrease rate to $100 per night.

Rate Rule: If the stay is MRate Rule: If the stay is M‐‐F and F and is 5 days or less, and booking is is 5 days or less, and booking is made within 10 days of the stay,made within 10 days of the stay,decrease rate to $100 per night.decrease rate to $100 per night.


1 2 3 4 5 6 7

$215 $215 $215 $100 $100 $100 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 $160

15 16 17 18 19 20 21

$160 $160 $160 $215 $215 $215 $215

22 23 24 25 26 27 28

$215 x x x x $235 $235

29 30 31

$235 $100 $100


1 2 3 4 5 6 7

$180 $180 $180 $180 $180 $180 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 x

15 16 17 18 19 20 21

x x x x x x $180

22 23 24 25 26 27 28

$180 $180 $180 $180 $180 $180 $180

29 30 31

$180 $180 $180


4


44


With Dynamic RatesWith Dynamic RatesWith Dynamic Rates


7More Repeat Opportunities!


77More Repeat Opportunities!More Repeat Opportunities!

Rate Rule: If the stay is M‐F and is 5 days or less, and booking is made within 10 days of the stay,decrease rate to $100 per night.

Rate Rule: If the stay is MRate Rule: If the stay is M‐‐F and F and is 5 days or less, and booking is is 5 days or less, and booking is made within 10 days of the stay,made within 10 days of the stay,decrease rate to $100 per night.decrease rate to $100 per night.


1 2 3 4 5 6 7

$215 $215 $215 $100 $100 $100 $180

8 9 10 11 12 13 14

$180 $180 $180 $180 $180 $180 $160

15 16 17 18 19 20 21

$160 $160 $160 $215 $215 $215 $215

22 23 24 25 26 27 28

$215 x x x x $235 $235

29 30 31

$235 $100 $100

Typical Objections to Yield ManagementTypical Objections to Yield Management

1.

My owners will never go for it: SW‐SW‐SW‐SW. 2.

Guests will be upset when they pay a different price.3.

I can’t afford to discount. 4.

I don’t need to discount: I am fully booked in August eight months

ahead of time.

5.

No one ever makes money by discounting.

6.

It’s not worth the effort.

1.

My owners will never go for it: SW‐SW‐SW‐SW. 2.

Guests will be upset when they pay a different price.3.

I can’t afford to discount. 4.

I don’t need to discount: I am fully booked in August eight months

ahead of time.5.

No one ever makes money by discounting.

6.

It’s not worth the effort.

Remember This?Remember This?Remember This?

“The core concept of yield management is to provide the right service

to the right customer at the right time for the right price. That concept

involves careful definition of service, customer, time, and price…

Price

can be set according to the timing of the service, the timing of

the

reservation, the type of service, or according to other rules that seem

appropriate… The ideal outcome of a revenue management strategy is

to match customers' time and service characteristics to their

willingness to pay‐ensuring that the customer acquires the desired

service at the desired time at an acceptable price, while the

organization gains the maximum revenue possible given the customer

and business characteristics.“

‐

Glenn Withiam, Cornell University

““The core concept of yield management is to provide the right serThe core concept of yield management is to provide the right service vice

to the right customer at the right time for the right price. Thato the right customer at the right time for the right price. That concept t concept

involves careful definition of service, customer, time, and pricinvolves careful definition of service, customer, time, and pricee……

PricePrice

can be set according to the timing of the service, the timing ofcan be set according to the timing of the service, the timing of

the the

reservation, the type of service, or according to reservation, the type of service, or according to other rules that seem other rules that seem

appropriateappropriate……

The ideal outcome of a revenue management strategy is The ideal outcome of a revenue management strategy is

to match customers' time and service characteristics to their to match customers' time and service characteristics to their

willingness to paywillingness to pay‐‐ensuring that the customer acquires the desired ensuring that the customer acquires the desired

service at the desired time at an acceptable price, while the service at the desired time at an acceptable price, while the

organization gains the maximum revenue possible given the customorganization gains the maximum revenue possible given the customer er

and business characteristics.and business characteristics.““

‐‐

Glenn Glenn WithiamWithiam, Cornell University, Cornell University

Implementing Yield ManagementImplementing Yield Management

1.

Rules‐based:

You set the rules, review them periodically. Ideally

your software will do the rest.

2.

Full integration:

The rate rules should be applied to phone, walk‐

in, and your own web site reservations, and ideally across your

marketing sites, since it is difficult to do all this manually.

3.

Validation:

Rate rules should be tested before making the rates

live to confirm that your rules have the outcome you expect.

1.

Rules‐based:

You set the rules, review them periodically. Ideally

your software will do the rest.

2.

Full integration:

The rate rules should be applied to phone, walk‐

in, and your own web site reservations, and ideally across your

marketing sites, since it is difficult to do all this manually.

3.

Validation:

Rate rules should be tested before making the rates

live to confirm that your rules have the outcome you expect.

Implementing Yield ManagementImplementing Yield ManagementImplementing Yield Management

1. Define your rate rules…1. Define your rate rules…3. Escapia does the rest by keeping

your rates updated on your website,

and your marketing network 24/7.

3. Escapia does the rest by keeping

your rates updated on your website,

and your marketing network 24/7.

1.

Premiums/Discounts Based on Occupancy

2.

Last Minute Deals

3.

Premiums/Discounts Based on Guest Type

4.

Holiday Premiums/Discounts

5.

Separate Rates Based on Source of Booking

6.

Standard vs. non‐standard stays.

7.

Weekday or Midweek Discounts

8.

Free or Discounted Nights

9.

Early Bird Rates

10.

Rollover Pricing

11.

etc., etc., etc.

1.

Premiums/Discounts Based on Occupancy

2.

Last Minute Deals

3.

Premiums/Discounts Based on Guest Type

4.

Holiday Premiums/Discounts

5.

Separate Rates Based on Source of Booking

6.

Standard vs. non‐standard stays.

7.

Weekday or Midweek Discounts

8.

Free or Discounted Nights

9.

Early Bird Rates

10.

Rollover Pricing

11.

etc., etc., etc.

Your Website

2. VALIDATE2. VALIDATE2. VALIDATE

... that web‐based computing would replace server‐based computing?

… to get out of the IT business?

… that Credit Cards would become a necessity?

… that relationships have a price and that RBOs

would become a major

competitive threat?

... that Online bookings would take over traditional bookings?… the Internet would transform the vacation rental industry?

We were right.

... that web... that web‐‐based computing would replace serverbased computing would replace server‐‐based computing?based computing?

……

to get out of the IT business?to get out of the IT business?

……

that Credit Cards would become a necessity?that Credit Cards would become a necessity?

……

that that relationships have a price and that RBOsRBOs

would become a major would become a major

competitive threat?competitive threat?

... that ... that Online bookings would take over traditional bookings?… the Internet would transform the vacation rental industry?

We were right.

Remember when we said…Remember when we saidRemember when we said……

• Yield/Revenue Management will be required of vacation rental

managers to remain competitive.

• It is already being used across the travel industry.

• Escapia has enabled it for vacation rental managers.

• Big Payoff when done right:

• An edge against the competition.

• A strategic tool RBOs

don’t have.

• Higher occupancy and revenue per home night.

• Learn:

• Ongoing process.

• It’s today’s competitive advantage so start now.

• If you don’t have time, make some.

•• Yield/Revenue Management will be required of vacation rental Yield/Revenue Management will be required of vacation rental

managers to remain competitive.managers to remain competitive.

•• It is already being used across the travel industry.It is already being used across the travel industry.

•• Escapia has enabled it for vacation rental managers.Escapia has enabled it for vacation rental managers.

•• Big Payoff when done right:Big Payoff when done right:

•• An edge against the competition.An edge against the competition.

•• A strategic tool A strategic tool RBOsRBOs

dondon’’t have.t have.

•• Higher occupancy and revenue per home night.Higher occupancy and revenue per home night.

•• Learn:Learn:

•• Ongoing process.Ongoing process.

•• ItIt’’s todays today’’s competitive advantage so start now.s competitive advantage so start now.

•• If you donIf you don’’t have time, make some.t have time, make some.

Moving ForwardMoving ForwardMoving Forward

The One‐Click Advantage with EscapiaThe OneThe One‐‐Click Advantage with EscapiaClick Advantage with Escapia

EscapiaVRS FoundationSoftware That’s Just the Beginning

EscapiaVRS FoundationEscapiaVRS FoundationSoftware ThatSoftware That’’s Just the Beginnings Just the Beginning

EscapiaNET Marketing and Distribution Helping Guests Find You

EscapiaNET Marketing and DistributionEscapiaNET Marketing and Distribution Helping Guests Find YouHelping Guests Find You

Escapia Guest ReviewsHelping Guests Know & Trust You

Escapia Guest ReviewsEscapia Guest ReviewsHelping Guests Know & Trust YouHelping Guests Know & Trust You

Escapia Yield ManagementThe Right Rates at the Right Time

Escapia Yield ManagementEscapia Yield ManagementThe Right Rates at the Right TimeThe Right Rates at the Right Time

• Vacation Rentals – as an industry ‐

are hitting the mainstream of travel.

• Mainstream visibility requires mainstream solutions.

• You – Escapia clients ‐

have it in your hands.

• Set the pace: Make your competitors follow you!

• The scenery only changes for the lead dog.

• Yield Management works for vacation rentals.

And the Grand Finale…• You could have the fastest race car or the best gourmet kitchen in the

world, but it’s up to you to learn how to use it and use it right!

•• Vacation Rentals Vacation Rentals ––

as an industry as an industry ‐‐

are hitting the mainstream of travel.are hitting the mainstream of travel.

•• Mainstream visibility requires mainstream solutions. Mainstream visibility requires mainstream solutions.

•• You You ––

Escapia clients Escapia clients ‐‐

have it in your hands.have it in your hands.

•• Set the pace: Make your competitors follow Set the pace: Make your competitors follow youyou!!

•• The scenery only changes for the lead dog.The scenery only changes for the lead dog.

•• Yield Management works for vacation rentals.Yield Management works for vacation rentals.

And the Grand FinaleAnd the Grand Finale……•• You could have the fastest race car or the best gourmet kitchen You could have the fastest race car or the best gourmet kitchen in the in the

world, but itworld, but it’’s up to you to learn how to use it and use it right!s up to you to learn how to use it and use it right!

Final ThoughtsFinal ThoughtsFinal Thoughts

To Learn More…To Learn MoreTo Learn More……

Online Pre‐Recorded Training

Online Classroom Training

Customer Support: [email protected], 1‐800‐ESCAPIA

John Suzuki: [email protected], 206‐832‐0240

… And be sure to join us at one of our upcoming

Vacation Rental Breakfast seminars (VRseminar.com)!

Thank you!

Online PreOnline Pre‐‐Recorded TrainingRecorded Training

Online Classroom TrainingOnline Classroom Training

Customer Support: Customer Support: [email protected]@escapia.com, 1, 1‐‐800800‐‐ESCAPIAESCAPIA

John Suzuki: John Suzuki: [email protected]@escapia.com, 206, 206‐‐832832‐‐02400240

……

And be sure to join us at one of our upcoming And be sure to join us at one of our upcoming

Vacation Rental Breakfast seminars (Vacation Rental Breakfast seminars (VRseminar.comVRseminar.com)!)!

Thank you!Thank you!

mailto:[email protected]

mailto:[email protected]

Documents

Welcome to the Revenue/Yield Management - Microsoftescapiacustomer.blob.core.windows.net/media/... · What is Yield Management? Yield management, also known as revenue management,