Yield management and coastal hospitality industry demand

MODICA, PATRIZIA DANIELA;LANDIS, CRISTINA;PAVAN, ALDO

2009-01-01

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Abstract

Hospitality industries are, like others in the service sector, capacity-constrained; they offer an intangible, perishable, heterogeneous, simultaneous product facing a complex administration. Companies balance supply and demand through the development of management techniques which involve strategic levers such as pricing policies. Yield management maximizes revenues or profits selling hotel rooms, restaurants seats, conference spaces, etc., thanks to price, time, demand and inventory units control. Demand and price management aims to attract customers with various levels of sensitivity to price; this is the topic on which the study focuses. Coastal hotels suffer from unstable and seasonal demand, therefore, revenue management practices like discounted price policies can be considered a determining factor in capturing tourist demand, in particular those leisure potential customers with different attitudes to cost. This paper analyzes the potential of the yield management in improving customer demand in a hotel environment located in Cagliari, a coastal town in the South of Sardinia. The case study was worked out using semi-structured interviews, held with hotel managers, as a fundamental tool for data collection. Our findings confirm that pricing policies represent a strategic key in stimulating tourism demand and improving hotel performance together with other variables which can be considered complementary to a good managerial tool like revenue management.