Within the hotel industry, revenue and yield management are two of the most useful tools available to managers, allowing them to maximize the money they make from guests. Although the two concepts are closely linked and share a lot of similarities, there are some important differences too. In this blog post, we explain the differences and compare the two strategies in greater detail.

Table of Contents:

Defining Revenue Management vs Yield Management

As a pricing strategy, yield management is concerned with generating the maximum possible revenue from a perishable inventory. Within hotel management, this means it is concerned with using data to ensure the right room is sold to the right customer at the right time for the highest possible price.

Effectively, it is about using price discrimination to optimize business results. Hotel guests are conditioned to pay different prices for the same product, depending on when they are staying at a hotel, how close to their check-in date they made the booking, the level of room demand, and various external factors.

Revenue management is a related concept, although it has a broader focus. It is concerned with maximizing revenue from hotel rooms in much the same way but also deals with the cost of selling and money made from other aspects, like food and laundry services. It can, therefore, be described as being concerned with the big picture.

Video: What Is Revenue Management?

Video: What Is Yield Management?

Why Are Yield and Revenue Management Important?

Both yield and revenue management allow hotel owners and decision-makers to take a measured, calculated approach to pricing. Consequently, they can maximize the revenue they generate from a limited, perishable inventory of hotel rooms.

The two strategies can be used in conjunction with one another because they deal with slightly different things. Yield management’s focus on maximizing revenue from hotel rooms alone is important because it allows owners to optimize the very core of their business. However, the wider focus of revenue management complements this because it allows owners to maximize the overall revenue generated by their hotel.

For more detailed information about revenue and yield management, please read the articles “What is Revenue Management?” and “What is Yield Management”.

Table Explaining Revenue Management vs Yield Management

In order to grasp further the concepts of Hotel Revenue Management vs Yield Management, explore the table below.

Aspect Revenue Management in Hospitality Yield Management in Hospitality
Definition A strategy focusing on predicting consumer behavior and optimizing product availability and price to maximize revenue in the hospitality sector. A variable pricing strategy aimed at maximizing revenue from a fixed, perishable resource, such as hotel rooms.
Key Focus Areas Demand forecasting, price optimization, market segmentation, distribution strategy, and customer relationship management. Pricing is based on demand and supply, room type availability, length of stay, and overbooking strategies.
Technological Integration Involves using sophisticated software for data analysis, forecasting, and dynamic pricing. Emphasizes the use of AI and machine learning. Relies heavily on real-time data processing systems for inventory management and pricing adjustments, often using predictive analytics.
Customer Experience Impact Aims to maximize revenue while maintaining customer satisfaction through personalized offers and understanding customer needs and behaviors. Focuses on optimizing occupancy and revenue, which may sometimes lead to challenges in customer satisfaction due to overbooking or pricing.
Challenges and Considerations Includes managing a vast array of data, adapting to market changes, integrating technology for real-time analytics, and balancing customer satisfaction. It involves managing the perishability of service, predicting accurate demand, handling overbooking, and maintaining a balance between pricing and customer satisfaction.

Revenue Management KPIs

Revenue management and yield management use several KPIs (Key Performance Indicators) to measure and identify areas of success and failure, as well as trends related to demand and customer behavior. Take a look at our articles within the category “Revenue Management KPIs” for information about the most used revenue management KPIs.

Revenue Management vs Yield Management FAQs

No, but the two concepts are closely linked. Yield management involves maximizing revenue from a perishable inventory, such as hotel rooms, and can be considered one element of revenue management. However, revenue management is a broader strategy, encompassing all revenue streams and focusing on pricing, distribution, and forecasting.

No. Yield is expressed as a percentage and refers to the amount of revenue generated by a revenue source in relation to the maximum potential revenue. So, for instance, if all rooms in a hotel were sold at the same price and the hotel sold half of those rooms, the yield would be 50%. Revenue, by contrast, refers to total earnings from all sources.

Within revenue management, the term yielding refers to the practice of adjusting pricing and availability to meet the level of demand so that yield and revenue are maximized. Yielding helps hotels to optimize financial outcomes.

Neither. Revenue describes the total income generated from all revenue sources. Yield describes the percentage of revenue earned compared to the maximum achievable revenue. Profit is calculated by deducting costs from revenue.

Yield management allows hotels to make the best possible use of their inventory of hotel rooms, typically by adjusting pricing and availability to match demand and optimize financial outcomes.

Did You Like This Article About Revenue Management vs Yield Management?

You might also be interested in the following articles:

More Tips to Grow Your Business

Revfine.com is a knowledge platform for the hospitality & travel industry. Professionals use our insights, strategies and actionable tips to get inspired, optimise revenue, innovate processes and improve customer experience. You can find all hotel & hospitality tips in the categories Revenue Management, Marketing & Distribution, Hotel Operations, Staffing & Career, Technology and Software.

Submit an Article

This article is written by:

Martijn Barten

Hi, I am Martijn Barten, founder of Revfine.com. With 20 years of experience in the hospitality industry, I specialize in optimizing revenue by combining revenue management with marketing strategies. I have successfully developed, implemented, and managed revenue management and marketing strategies for individual properties and multi-property portfolios.