Similarly, hotel managements will sell more than the number of rooms allocated to a specific price level, as a means of maximizing occupancy rates.4 When overbooking occurs, it is typically the holders of the less expensive airlines tickets who get bumped from the flight, or the holders 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.
An expanded and technologically improved computer reservation system was launched by American Airlines and its partners in the venture in 1992.23 The new system is called Confirm, and the owning partnership includes, in addition to American Airlines, Budget Rent A Cars, Hilton Hotels, and the Marriott Corporation.24 The power and sophistication of the new system exceeds the capabilities of competing systems.
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 industry to adopt the yield management concept. While this problem is more serious for the marginal operator, it is an issue of concern to all operators. The development of a marketing strategy to stimulate the use of unused capacity in the lodging industry was crucial, and thus far yield management has been the answer.
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