Hotel Yield Management Practices Across Multiple Electronic Distribution Channels

Abstract

In the hotel sector, yield management traditionally balances a supply of perishable room nights against demand by manipulating price and time of consumption. While widely accepted, Internet-based distribution channels with different cost structures complicate the process. Hotels must not only manipulate price in response to supply and demand, but must also choose which portfolio of distribution channels to use. This study investigates whether up-market European hotels use three yield management practices: varying room rates with market demand; varying participation in Internet channels with market demand; and differentiating rates on Internet channels in times of high demand. Introducing the concept of a consumer price index for hotel rates, the study found that while one quarter use the first technique, use of the two other practices was considerably lower, suggesting a lack of sophisticated yield management among participants.