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Call Yield Management Within The Hotel Industry

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Call Yield Management:
A call yield management system is one that enables hoteliers to predict and understand their telephony usage in order to optimise their revenue and create more guest loyalty.

Why use Call Yield Management?

Telephone calls are an ideal service to optimise with yield management. The setup of a private telephone network is expensive, both in terms of installation and configuration, therefore it is capital intensive. There is no revenue to be gained from a telephone network unless calls are made, therefore the service is perishable. A telephone network has a stable and average variability of both value (intensive competition has reduced price gaps between local, national and international calls) and demand (tariff reductions mean that people don't wait until particular hours of the day to make calls).

For hotels, a call accounting, sometimes called a call logging system, is a vital part of call yield management. Historically, a hotel could rely on guests making direct dial phone calls from their rooms. The telephone department operated at around an 80% profit margin and phone revenue could account for around 3% of the total annual revenue for the hotel. It is a fact that over the past few years telephone revenues have been dropping dramatically. There are many reasons for this but the most prevalent are alternatives such as charge cards and mobile phones that have increased their market penetration, while rapidly decreasing their costs. Wireless hotspots and in room HSIA (High Speed Internet Access) have also increased the ease with which people can use alternative forms of communication, other than simple dial up, to access email and instant messaging applications.

The benefits of a call logging system are widely known and the reports from a hotel's call accounting system can be used to determine the calling patterns of their guests, such as:

• on/off peak calling periods
• calls to specific numbers (e.g. Internet providers)
• calls to particular regions/countries
• whether guests are making short or long duration calls
• are guests receiving more calls than they are making (if so, why?)

A call accounting/call logging system can also alert hoteliers to evidence of misuse or telephone fraud by both guests and staff. Telephone bills can be reconciled against the call accounting/call logging reports to ensure that carrier bills are correct. The hotel call accounting reports can identify out-of-service trunks, equipment and lines that the hotel is paying for that are either under utilised or not being utilised at all. These are all areas that, left unmonitored, could very easily erode profit for a hotel.

Call yield management combines these call accounting/call logging reports, along with the guest data, to profile the different types of guests and how they use the phone. Future demand can then be forecasted and the hotel can assign calling rates based upon the check-in status of each guest. VIP's, loyalty guests and international visitors, can all receive different calling rates. If most of the international visitors to a hotel came from a handful of countries, then the hotel would maximise revenue by negotiating good long distance rates to those countries beforehand and offer attractive call packages to those visitors.

Loyal guests would receive lower calling rates and/or special rates to their top 5 frequently dialled numbers. A standard guest may receive a different set of calling rates that vary depending on if their occupancy period falls within a time when telephony usage at the hotel is either high or low. By utilising such guest centric charging (i.e. charges that are individual to a guest rather than the room they stay in), call yield management can help stimulate room yield through the loyalty enhanced experience that guests receive.

Good call yield management solutions will increase revenue by providing hoteliers with cost management that aids decision making. It enables them to understand the diverse purchase drivers of their guests and forecast the high demand and low demand periods, enabling guests to self-sort based on their price sensitivity. The cheaper calls in the low demand periods are balanced by the increased call charges in the high demand periods, so the hotel benefits from a smoother revenue flow. Call pricing also needs to be harmonious with other communications services like fixed and wireless HSIA. Imbalances cause migration between services and the associated dilution of overall yield. In most cases, organisations that have used yield management effectively find that they achieve greater profitability and a clearer understanding of the yield achieved across telephony, HSIA and rooms.

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