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  • Writer's pictureNanci Sherman

Why Yield Management is a Cop Out

Ooh, I can get in trouble for this. My brother Eric Orkin created Topline Profit, the first yield management system for hotels, but I must speak my truth and experience.

Like all general managers, I was obsessed with my market position daily. Anybody can cut rates to sell disposable inventory, but the less you need to discount, the more substantial your revPAR is.

I have heard every excuse every month we didn’t make our budget or take the #1 spot in our comp set.

“The budget was wrong.”

“There isn’t enough convention business.”

“Groups didn’t materialize.”

The fact is that if you have five hotels in your competitive set running occupancy over 50%, you could fill your hotel. The fish are already in the water. It’s your job to romance them to your position. Otherwise, each hotel contributes to racketing down the overall ADR like dominos.

Fish aside, you need to become a customer magnet. Your team needs to understand the concept of extreme hospitality as a strategy to pull guests into your orbit and be so unforgettable that they will serve your best interests while you serve theirs.

Banter in the C Suite refers to customer service, but employees don’t know what they don’t’ know. If you ask most employees what luxury service is, they will answer, “an upgrade,” or “fulfilling requests.” That is not hospitality. You get that when you order a hot dog.

I got into the hospitality game with a B.S. in Journalism. My mentor, the hotel god Jim Abrahamson, demanded greatness in my first shot as a GM. I did what most people do when they attain their first leadership position. I focused on what I knew best which is like fiddling when Rome is quietly burning around you, and you spend less time on what you don’t but should know. I didn’t want to disappoint Jim or fail, so I looked beyond what my competition was doing, and I discovered hospitality in the experience zone.

Emotion is why any of us buy. We think we will feel better if we buy X or fear what will happen if we don’t. That is why happiness is the best business strategy there is, but we don’t hear “emotion” or “happiness” in most boardrooms.

If you were in the Hotel Olympics and had to perform a skit proving that customer-centric practices contribute 25% more revenue per year, what would you have to demonstrate to win the gold?

Yield what you want, but never your control. Give the people more than they expect and you won’t have to chase market share. It will come to you.

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