Yield Management

A dynamic pricing strategy aimed at maximizing revenue and profitability by continuously adjusting prices and availability based on current and forecasted demand. This concept is widely used in the hospitality and aviation industries, where capacities (e.g., rooms or seats) are time-limited and cannot be stored.

Key components of yield management include:

• Segmentation of target groups: Customers are divided into different segments based on their varying willingness to pay.
• Forecasting: Future demand is predicted using data analysis and historical booking patterns.
• Price flexibility: Prices are adjusted according to the time of booking, demand, and availability to encourage early bookings and fill short-term gaps.
• Optimization of occupancy: The goal is to achieve the highest possible occupancy at an optimal average price, without compromising long-term profitability.

Yield management is closely related to revenue management, and these terms are often used interchangeably.