It’s time to look a the trends and developments that will rock the spa & wellness industry in 2024. Here’s one in our series and stay tuned for our upcoming guide: 7 SPA & WELLNESS TRENDS FOR 2024: A HOSPITALITY HANDBOOK
Yield management has been in use in the airline and hotel industry for years, but only recently is a wider audience cluing into its potential.
Yield management is the business practice of leveraging data to optimize pricing and capacity utilization based on fluctuating demand and availability. By understanding and capitalizing on the patterns in your data, businesses can boost their revenue potential, approach maximum capacity utilization, and enhance the overall customer experience at your spa and for your hotel or resort’s other ancillary revenue streams.
This pricing strategy has been in use in the airline industry for decades and many major hotel brands have been using dynamic pricing for several years. But it’s only recently that a wider audience is cluing in to its potential. More and more people are starting to see that it’s not just about adjusting room rates or changing prices based on time of day or year, and that yield can be managed in a variety of ways through a range of applications and applied to spas, activities, amenities, and more.
Increased revenue by $8 million with an 80% profit
Someone in the know is Suzanne Holbrooke, Marriott’s Senior Corporate Director of Spa Operations, who, more than a decade ago launched a company wide program to incentivize spa front desk staff to offer treatment upgrades like stones, face masks, CBD, and scalp treatments for an additional cost. “This increased revenue by $8 million in 2019 with an 80% profit,” she told us in an interview. “There are many facets to yield management,” she said.
Examples of creative ways to use yield management
Some more granular examples of ways in which companies are managing yield:
Last-minute deals: Offer discounts for unsold capacity as the service date or time approaches to stimulate demand.
Early-bird discounts: Encourage customers to book early by offering lower prices.
Variable capacity: Adjust the available capacity based on demand forecasts, such as having flexible staffing levels.
Categorizing inventory/capacity: For example, airlines divide their seats into various fare classes, releasing them for booking at different times and prices. Similarly, this could work for treatment rooms, service stations, and cabanas.
Utilization % Rate: As your spa or facility fills up your system will automatically adjust prices to a designated yield rule of your choice, allowing you to maximize revenue during these high traffic times.
Blocking inventory: Holding back some capacity to be released closer to the service date, especially when higher prices are anticipated.
Blackout dates: Restricting or not allowing discounts or special offers during peak demand periods.
Package deals: Bundle products or services together at a discounted price, often leading to increased overall sales.
Book4Time CEO, Roger Sholanki, says, “Revenue and yield management are easier to manage than ever before with the development of powerful data collection tools combined with cross department integrations and intuitive, easy to use tools and interfaces. Our customers are discovering new ways to manage revenue and yield that would have been unthinkable just a few years ago. Book4Time’s reporting dashboards with their wide range of accurate data points allow for better forecasting and help decision makers cut through the noise to find simple solutions in complex numbers.”
This development is redefining how an entire industry views revenue potential and will continue to do so. Business leaders are catching on to the fact that for fixed capacity industries like hotels, airlines, and spas, mastering the art of yield management can spell the difference between mediocre returns and roaring success.
Spa Executive is published by Book4Time, the leader in guest management, revenue and mobile solutions for the most exclusive spas, hotels, and resorts around the globe. Learn more at book4time.com.
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