Abstract

The case deals with the revenue management (or yield management) issues typically related to capacity constrained industries such as the hotel industry. Hotel Avant Garden, situated in Jaipur, India, was an attractive destination for tourists and business people. The hotel had three different categories of rooms (Deluxe, Luxury, and Regular) priced accordingly and discounted on the basis of certain fixed criteria. The customer segments comprised leisure travellers, business people, travel agents, and incentive firms, all of them with distinct tastes and preferences in terms of choice of rooms, period of booking notice, and duration of stay. Eeshita Desai, the newly appointed General Manager of the hotel, took the initiative to remodel the revenue management practices of the hotel. In the process of analysis, several issues pertaining to the timing of reservation of the rooms, and to each customer segment, etc., came up. She calculated the booking limits, protection levels, and overbooking limits for the different category of rooms based on 5 years of historic data on demand distribution, and sought to implement the new system in the hotel. However, there were still several other issues that remained a cause for concern.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• What yield management is and when it is appropriate
• How the hotel industry and other similar industries fit into the service profile
• Customer segmentation and demand fore-casting
• Calculation of booking limits and protection levels
• The concept of overbooking

Keywords

Revenue management, Yield management, Customer segmentation, demand forecasting, booking limits, protection levels, overbooking, capacity management, discount allocation, duration control, supply control