Successful Yield and Revenue Management in the Food and Beverage Department

Term Paper, 2017

9 Pages, Grade: 1,0


Table of Contents

1. Introduction

2. Yield and Revenue Management
2.1 Definition and Difference
2.2 History

3. Revenue Management in Hotels
3.1 Reasons
3.2 Duties of a Revenue Manager in Relation with Rooms Division

4. F & B Department
4.1 Revenue Management in the F & B Department
4.2 Booking
4.3 Offers
4.4 Promoting

5. Conclusion

6. Reference List

1. Introduction

This term paper aims to first define yield and revenue management in general and further with special regards to the Food and Beverage Department. Furthermore, different offer - and promotion possibilities are being displayed, which hotels can implement in their strategy of improving their yield and revenue management.

2. Yield - and Revenue Management

In the two following subchapters, the definitions and difference of yield - and revenue management will be studied. Furthermore, the history of revenue management will be inspected.

2.1 Definition and Difference

Yield management is used to examine and factor the consumer behaviour to obtain the maximum amount of profit from a good or service. The examination of consumer behaviour is used to determine the exact price level which yields the best results regarding the remaining goods for sale (Conrady, 2013).

A revenue manager has the aim to ‘sell the right room to the right client at the right moment at the best price within the right channel' (Schaller, 2017). Revenue Management is used to predict market demand, to optimize inventory and price availability and to maximize revenue using a management strategy to change prices according to the demand of the customers. It helps to create demand for rooms also in the low season (Xotels, 2009), as prices should rise when demand is strong and decline when demand is weak (Schaller, 2017).

The difference between yield management and revenue management is that yield management focuses more on maximising the revenue yield earned from the selling price and the volume of activity. In comparison to revenue management, which is seen more as development of yield management and quite strategic for the long-run, yield management is seen more tactical with a narrow focus. An example for yield management is only the selling of a hotel room or plane seat, rather than also additional revenue gained through i.e. food or merchandising (Goodfellowpublishers, n.d).

2.2 History

It was airline companies in the United States of America, who developed and started to use Yield Management. The reason for this was the act of Airline Deregulation in the year 1978, where it was adopted, that airlines could now determine their own fares and domestic routes. Big airlines however faced problems with the deregulation, as they were not able to compete with the low fares of new and small airlines. These difficulties led former CEO of American Airlines Robert Crandall to divide the market with two different classes, which is said to bethe start of yield management (Naseem, n.d.)

At the beginning of yield management, airlines started to use the Sabre reservation system (Semi-Automated Business Research Environment). This system was used to adjust the discounts and full-fare seat prices each day according to the already sold tickets for the different flights and today it includes more features like the calculation of reservations data collection, offline data collection, forecasting, overbooking, performance measurement and reporting (Donovan, 2005). Nowadays also other industries, than the airline industry, are using yield management to maximize profits (Naseem, n.d).

3. Revenue Management in Hotels

One can say, that most touristic fields, like restaurants, hotels, cruise ships, airlines and car rentals utilize revenue management for their business nowadays. Hotels adapted this system as it was very successful in the airline industry. Following, some reasons for the use of revenue management will be examined together with the duties of a revenue manager in relation with rooms division.

3.1 Reasons

There are several reasons for the use of revenue management in the hotel industry. One of them being, the ability to control room occupancy and not sell out rooms too soon, because people might be unhappy when they are not able to book a room, as they would rather pay a higher price for it than not getting one at all. Furthermore, the pricing will have a substance behind it and will not just be a guess. As well as that, having own room rates that match the individual hotel rather than solely reacting to price changes of competitors is of high importance (Stoessel, 2015).

3.2 Duties of a Revenue Manager in Relation with Rooms Division

A rooms division manager's task is to forecast bookings for a whole period and adjust prices according to the occupancy rate and special events taking place during that time (Schaller, 2017). As a not occupied room is a lost room, that cannot be sold later, it is important to develop a strategy to have the right occupancy for the hotel at all times. This can be achieved by analysing and predicting booking patterns and from this development, a system for the successful revenue management (Conrady, 2013).

4. F & B Department

The food & beverage department is crucial for the management of restaurants, bars and the food and service itself. Its aim is to keep the standards and quality as high as possible. Some examples within the F & B department are the gourmet restaurant, the restaurant, the hotel bar, the room­service and the swimming pool (Hec, 2016). The following chapters will examine these more in detail.


Excerpt out of 9 pages


Successful Yield and Revenue Management in the Food and Beverage Department
Cologne Business School Köln
Catalog Number
ISBN (eBook)
successful, yield, revenue, management, food, beverage, department
Quote paper
Alicia Poth (Author), 2017, Successful Yield and Revenue Management in the Food and Beverage Department, Munich, GRIN Verlag,


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