This essay will explore the issues surrounding yield and capacity management in hotels. And will attempt to make recommendations to managers on how the main issues identified should be addressed, throughout this essay literature collected on the topic will be critically reviewed.
To explore the issues of yield and capacity management the terms must firstly be clearly understood. Glenn Withiam an educator from the center for hospitality research at the Cornwell University of Hotel Administration states that yield management is “the umbrella term for a set of strategies that enable capacity-constrained service industries to realize optimum revenue from operations”. Another definition from Sanchez and Satir describe yield management as “an integrated and systematic approach to revenue maximisation via manipulating rates offered to the customers in light of forecasted demand”. This could be interpreted simply as offering the right service to the right customer at the right time for the right price. An example of this could be the anticipated MTV awards that are visiting Belfast on Sunday 6th November in the Park Inn in Belfast’s’ City center is £590 based on 2 people sharing staying for 2 nights (Saturday and Sunday) while to book in the same hotel for the following weekend its only £142 on the same credentials. The most simple and to the point definition found is as follows “yield management is concerned with the maximization of room revenue through the manipulation of room rates in a structured fashion so as to take into account forecast patterns of demand” (jauncey et al 1995)
According to the business dictionary capacity management can be defined as the “adjustment of the capacity of a resource (equipment, machine, or system) to meet a planned demand or load. In general, manufacturing capacity may be adjusted by working overtime or redeploying the manpower.” An