of the less expensive rooms who learn that they must seek elsewhere for rooms. In the airline industry, in extreme cases, a flight may be canceled, if ticket sales provide an unacceptable yield management outcome. The hotel industry does not have this option.
Most certainly, yield management is a tactic which may enhance to a significant degree airline revenues and profits.5 At the same time, however, the practice often results in the unfair and inequitable treatment of ticketed passengers in the airline industry and of booked guests in the hotel industry.
Conditions in the Hotel Industry That Led To The Adoption of the Yield Management Concept
The occupancy rates in the hotel industry have been flattening in recent years. Occupancy rates in the mid 60 percent range are projected for the first half of the 1990s, in comparison with occupancy rates above 70 percent throughout the decade of the 1980s.6 Further, many existing units are old, and
4P. Jones, and D. Hamilton, "Yield Management: Putting People in the Big Picture," Cornell Hotel and Restaurant Administration Quarterly, 33 (February 1992): 89 95.
5"Conference Report Yield Management Magic?" Cornell Hotel and Restaurant Management Quarterly, 31 (May 1990): 14 15.
6B. Sharav, "Hotel/Gaming Industry," Value Line Investment Survey, 5 September 1992, 1772 1773.
in so so or worse condition. Many are in locations which are now declining. There are also wide variations among travelers in terms of what sorts of facilities and amenities they really want and how much they are willing to pay for them. Thus, the market conditions will likely be good for the efficient and alert lodging operator; however, these same conditions could prove to be disastrous for others.
For the lodging industry as a whole, a major problem to be solved is the stimulation of the use of unused capacity. This factor was a major consideration in the decision by the hotel ...