** Definition of Revenue Management or Yield Management **
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Hello and welcome to the channel I display Complete. I hope you're doing well. You are on the chain of seasonal rental companies, professional sub-renters, and seasonal rental concierge services who want to increase their turnover with revenue management methods. A question that I'm sometimes asked, because it's true that on the channel I'm displaying Full, I share a lot of methods to increase your turnover to properly determine your prices, properly determine your length of stay, well determine the rules related to housekeeping or cancellations, and I may happen to talk about revenue management, yield management, and in these cases, the question comes up, and often happens: “Élise, what is what is revenue management, what is yield management? ". So, I said to myself that it was a good idea to make a video on this subject to clarify, precisely, what we are talking about and how, obviously, it can help us and be useful to us when we are a seasonal rental company, under -professional rental company, or concierge service. If you're interested, stay with me, we're talking about this today.
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― Hello, welcome to you.
− Hello Romain, welcome. I hope you both are well.
On this question of revenue management and yield management, it will obviously already be written in the title of the video, but if you don't have them in front of you, how is it written? Revenue management is like “revenue” in French, except that it’s English, there’s an extra “e”. And Yield management is YIELD.
− Hello Chimène. Welcome. I hope you're well.
On revenue management or yield management, the first thing I could clarify, because it is a question that comes up so often, is: what is the difference between the two?
− Hello Yvan. Welcome to you.
If you listen to revenue management academics, or even revenue management professors, they will tell you that revenue management and yield management are a little bit different. There is in particular a book by Ms. Cloutier and Mr. Legault which explains that there is a strategic nuance between the two. This is extremely true, but it is a bit technical, as a way of seeing and differentiating things. The reality on the ground for companies is that today, revenue management and yield management are considered to be two identical things. But it’s true that “Yield management” is the word that was initially used to create and name this way of working. It's also the word that is used the most in the media, I don't really know why. In any case, today, in companies, we use the word “revenue management” a lot more. In fact, this is what is today the name of the services that are created in revenue management, for example. So, yield management or revenue management, don't get your brain in knots over such a small matter, because there is precisely little difference between the two, not because you are wrong to think, not at all.
Thin ! These are the hazards of Lives. This isn't the first time this has happened to me. My headphones cut out, so I won't have the headphone mic, it'll be the computer mic. The quality will be a little less good, but hey, too bad, we'll make do.
− Fateh: “Hello. There are several authors who differentiate between the two terms. »
Exactly, Fateh. It's like you say. Rightly, there are several authors who will differentiate between the two terms. That’s also why it’s interesting. There are revenue management authors, academicians, I call them. And then there is the reality on the ground, the reality of the profession. That doesn't mean one or the other is right or wrong. In any case, I am speaking to you more of a reality on the ground. In fact, there is no tourism company today that will boast of having a revenue management service, and a yield management service, not at all. Today, the trend is more for yield management services to change their name, and in fact, there is no difference between the two at all. So, there you have it. This is why it is a point that makes sense, but which today does not deserve to spend too much time on it.
Now that we've said that, the question still remains: what is revenue management? What is it about, and what does it mean in reality? To give you a little perspective, in fact, it's a profession that has existed since the 60s. Likewise, on this, there are expert debates on the precise date. I generally remember the 1960s. It's a profession that was created by the airlines, which in fact, at one point, historically, you should know that the price of a plane ticket was always the same. In the United States, at a given moment, there was a deregulation of this pricing, that is to say, we authorized the fact of being able to fluctuate prices, and that made it possible, precisely, to have a price variation on the price of tickets. What problem did we come to solve in relation to this? The problem that we came to solve is that we sometimes had certain aisles, certain flights, in fact, which could have been filled twice, while other flights, on other dates, on other other schedules, had difficulty finding takers. And the problem is that in both cases, whether we are completely full, or there are three people on the plane, we had to assume the same fixed costs, that is to say the kerosene, pilot's salary, crew on board, etc. So, it was absolutely necessary to resolve this difference, this mismatch between demand which varies over time, and costs which remain relatively fixed. And that's how revenue management was born, where we say to ourselves: "During certain periods, where I have less demand, I'm going to make prices a little more attractive to attract people. And during other periods, where I really have more requests, well I will allow myself to have slightly higher prices, and as a result, to only give access to my service to those who are those most able to pay, and who most want to benefit from it. » This is a point that is often forgotten in the media. It's true that revenue management, it must be said, has a bad press. It's a profession that is not badly criticized, it's a profession that is criticized, because we say to ourselves that these are people who are ripping us off, because they double the prices, they triple the prices, etc. . The thing that is often forgotten by the media is that it is thanks to the fact that during stronger periods, we set higher prices, whereas conversely, during weaker periods, we can also allow for much lower prices. And so, in the end there was an article that was written by a colleague and revenue management consultant, Romain Charrier, and I really liked his article which said: “Revenue management is communist. » Because in the end, unlike this extremely capitalistic idea of revenue management, and it is true that it is quite undeniable, but in the end, the fact of also giving access to other periods at lower prices extremely attractive, it could also be a form of communism. So. I do not intend to go into extremely political debates, but for the anecdote, it is still interesting to realize that thanks to revenue management, it is true that in certain periods, we pay the ticket of much more expensive train, but it is also thanks to that that in other periods, the prices are extremely low, because otherwise, without revenue management, we would have a single price.
− Romain: “Do you have an accountant who knows the concierge service well to recommend? Mine does not understand the operation between the concierge, the owner, and Airbnb for billing. »
Completely off topic. If you want, we'll talk about it later. Besides, I will perhaps ask the questions at the end, otherwise, I am afraid of blurring the quality of my speech a little. So much for revenue management, and for the history of revenue management up to the present day.
This method, today, is essential in the world of tourism. You do not have a single hotelier or tourism player, whether it is transport, cruises, entertainment, parks, like Disney Park, Astérix Park, all these players know, operate, set up revenue management in their activity today. They all, without exception, have revenue management teams and revenue management tools. It is part of the standards today in the world of tourism. The problem is that, in seasonal rentals, there is a slight delay. Today, we have a vocation, precisely, to make up for this delay, to share information, so that in seasonal rental, we can also, even if we are an independent rental company, we are alone in our activity, we can have access to the same weapons. Why is it important? It's important because when we market on Airbnb, on booking, and generally publicly, we are compared with players who have all these means. So, it is essential to also have these resources with us, in the exercise of our profession, to be able to face competition and today's market in the best possible way. This is what revenue management is.
Now you're going to tell me outright: "We can see what this method is, and everyone does that." For us, in seasonal rentals, there may have been a slight delay in recent years. We are in the process of filling it, but concretely when you are a seasonal renter, it's the same thing for a sub-let or for a concierge service, what does that mean, doing revenue management. Concretely, for me, in my daily life, what aspect does that cover? » This covers three main aspects, when you are in the seasonal rental business. The first aspect is: how can you know how to get your prices right, that is to say, have the highest possible price as much as possible? This supposes that over certain periods, it is a low price, because the highest possible price, at that moment, is low. In any case, depending on the period, have the appropriate price as high as possible. That's about pricing. And in fact, pricing, there are many aspects that arise from it. So how do I set my prices? How do I determine promotions? How do I determine both the price and the amount of the promotion? How do I manage to do medium duration? At what price should I buy medium term? How do I respond to someone who requests a reservation for a longer period than a short stay, and who wants to negotiate prices? How do I respond to that? How do I respond to a company that also wants negotiated prices for a recurring collaboration? So many questions answered by the revenue manager in the service of increasing turnover. And that's true, I'm starting to realize that this is a point that I forgot to clarify. This is the number one interest of revenue management. What is the number 1 objective of revenue management? It is to increase the turnover of the activity, whatever it may be. Increase the turnover of a cruise company, increase the turnover of Parc Astérix, increase the turnover of your gîte or your sublets. So, the first thing is the price and all the related topics around the price.
The second thing is inventory. This is what I call Tetris. The goal is to have a 100% full schedule. Obviously, there is a good correlation to be had between the price and the inventory, the amount at which we sell, and the fill that we manage to obtain. But if we take the filling part itself, well the game is extremely simple, and you all know it, because I think you have all done it if you are not too young, because it I still have to be of a certain age to understand the reference I'm going to have. But if you've played Tetris at least once, the little blocks that go down, remember, you can move them, and then interlock correctly to make the lines jump. So if you're not too young, you've played Tetris. I hope there aren't many people who will say in the comments: "But what is Tetris?" I don't understand. » Because that would make me look really old, I must admit. So Tetris is exactly that. This is the game we play: having the most optimal nesting possible between reservations in order to obtain one hundred percent. In Tetris, when you place a piece incorrectly, you have an empty square which can remain, which even, sometimes, is doomed, which you can no longer fill. This is exactly what we want to avoid, too, when filling reservations. There are different methods, precisely, to improve this inventory and filling aspect. One of them, which you know well, is working the minimum length of stay required. This is a key vector for maximizing occupancy, and which really allows us to avoid these gruyeres in seasonal rentals. These are called orphan dates. We want to avoid that to have 100% filling as much as possible. You can also optimize distribution: which sites do you choose to distribute to? What prices will you position yourself on on your different distribution sites?
We have said that for a seasonal rental company, revenue management or yield management will help on the pricing part, and all related subjects, on the inventory part, therefore filling, but also on what we call income integrity. ; in English, it is returned integrity. On this aspect, the idea is to say that the two number one points help us to sell more, increase our turnover. And then there is also a final point, which is to try to avoid losing any. Why avoid losing it? Because in fact, we are in a profession where there are a lot of different settings. If you have Airbnb and booking ads, you know as well as I do that there are a lot of things to configure. There are a lot of items, don't get confused. Same for the channel manager. If you have a channel manager, there are also a lot of settings to make. In these cases, income integrity is really about ensuring that you don't have a leaky bathtub. That's a bit like the image. That is to say, if you have a full bathtub, but there is a small hole, obviously the water will flow out, and as a result, you lose money. So, the idea is to block the leaky bathtub. What could this hole in the bathtub be? I will give you an extremely concrete example. If you have already, in the past, participated in the genius program, you might have noticed, I made a video on this some time ago which I entitled the trap of the genius program on booking. You can find it on the internet, and I may have put it in a playlist. To be checked. In any case, this is the trap of the genius program on booking. This trap is that on the genius program, you agree to have a reduction on the prices offered for your ad, in exchange for which your position in the search results will be better. It’s a give-and-take system. You are, in fact, buying a better position. There is a catch in this program. If you want to know more, I'll let you watch the video. This is because you have the possibility of having dynamic pricing, and there, the genius program will oscillate of its own accord towards percentages which can go up to -30%. There are seasonal rental companies who talk to me about it, who say to me: “Wait, your video was still crazy. I realized that I had that. » There are at least two people who told me that, in addition to the client for whom I discovered this thing that we went to correct together. There were some who told me: “I had that, and I didn't necessarily realize it, and I went to correct it. » That's income integrity, exactly. It's trying to block leaky bathtubs. And if at this stage of your sales, depending on the performance of the property, in fact you did not need to grant génius a percentage that goes beyond 10%. It's like wasted money. It's like a leaky bathtub. And you miss out on money, suddenly, on a daily basis.
So, if you are a seasonal renter, what revenue management will help you to know how to do is work better on your prices, work better on filling stays and inventory, and avoid leaky bathtubs. In other words, when we invest, and when we start in seasonal rental, there is, for me, something extremely striking that I notice in our field of activity, which is that people will invest a lot upstream. People will work a lot on their project upstream. We have a whole bunch of influencers and experts who teach us how to come and prepare the project, how to properly create your ad, configure your channel manager. And it's really extremely important and crucial to learn how to do these things. But afterwards, when we arrive on the pitch, we are often very alone, because what we saw beforehand was a bit like the coach in the locker room who explained to us: “You are going to do your announce like this, you are going to take your photos like this. That's it for the decor, choose your location carefully, do your calculations carefully in your Excel. » But then we arrive on the ground. And in fact, reality does not always correspond to Excel. The reality is often different, because many unforeseen things can happen in the tourism sector. Unfortunately, we are realizing this with the pandemic at the moment. But it could also be other things. We may have new competitors arriving, we may have a hotel opening in the area. There may be a competitor who starts to have completely relevant pricing behavior, who has extremely expensive prices, or who has extremely low prices. All these things, you have to know how to react to continue to increase the turnover of your property; and have as much as possible an adequacy between the beautiful Excel calculations that we did upstream, but which are theoretical, and the reality on the ground which really requires having these results to be able to guarantee the profitability of your project, and the sustainability of all the personal projects that are associated with all that, and getting into seasonal rentals. It's true that for many people, seasonal rental is obviously not an end in itself: it's preparing for retirement, it's having more time, having freedom, leaving your salaried job, spending time with his children. And that’s what’s important, in the end, that’s what’s essential.
This is what I wanted to share with you today about revenue management, and in particular revenue management in the context of seasonal rentals. I hope that this could help you, guide you, and enlighten you on what we are talking about when we say this somewhat barbaric word that is revenue management or yield management. I will answer the questions. Even if these are questions on other subjects, well that doesn't matter.
− Romain, you said to me: “Do you have an accountant who knows the concierge service well to recommend?
I think so. I can think of several, actually. What I suggest to you, Romain, is to write to me at jannoncecomplet.com so that I can help you with this and direct you to people who will really help you.
− Hello, welcome.
− Hi Jérôme. Welcome to you.
− Hi Sandrine. Ah yes, you are signing in relation to earlier. I think we didn't see your message.
I have no further questions at this stage. If today, you are not part of our private group seasonal rental prices and maximization of turnover, well do not hesitate to click on Facebook. The link is just below, or above, depending on where you're watching the video, to join this group. I actually receive a lot of requests to join the group which I refuse, because in fact, there are some questions to answer which are extremely basic, and in particular your email, because that is what will allow me to send you a welcome bonus. It's actually a short guide of a few pages in which I summarize the six mistakes not to make when determining your seasonal rental prices. It's honestly a nice document. It gives you a lot of ideas. I talk about both the problems and the solutions. So you really have all the kit to know how to manage, and not make these mistakes. So, don't hesitate to click on the link to join the private group, answering the questions, because otherwise, unfortunately, I will be forced to refuse your request.
− Fateh: 'Some hotels have changed revenue management through revenue optimizing. Do you have a comment on this? Personally, I think that this new name has linked revenue management to cost control.'
I have never heard of income optimizing. I will translate a little of what you say. In fact, in revenue management today, the idea is to only deal with turnover. The historical model of revenue management is to only focus on turnover. For several years now, there have been many people who are, in fact, interested in the balance between turnover and costs. It's a debate: should we integrate a certain number of costs into revenue management? Overall, behind this, there is really the idea of having a more holistic vision of the expected income of a traveler or a customer. There are also marketing concepts, which at the moment are attached to this. Here, I'm not talking to you about seasonal rentals, but I'm talking more about tourism in general. It's about not focusing – it's getting a little technical, but it's important to share it – on the filter of demand, on the price of the required night. I'll give you a very concrete example. We could quite easily say to ourselves: 'A given client who has a negotiated price will only pay 45 euros per night. At that time, demand is high, I can sell for more, so I'm not going to take these reservations at 45 euros a night.' We can also say to ourselves: 'This customer only pays 45 euros per night, but I noticed that when he comes to my hotel for 45 euros per night, it is someone who will also book room service, who is going to have a bottle of champagne delivered to the rooms, because he has something to celebrate. He's someone who won't hesitate to go out to dinner with his wife in the evening, precisely to celebrate this wedding anniversary.' And as a result, having a much more holistic list of what this client reports allows, in fact, to change the prism of their choices, and therefore, to make different decisions. Because we may have refused this customer at 45 euros to favor a customer at 60 euros. But in fact, the 60 euro customer will only make 60 euros. He's going to go eat at the flunch next door, and we're not going to see him again. So these are the new ways of thinking in the revenue management profession, which call into question the fundamentals a little. Obviously, the basis will always be the same: maximizing turnover is the history of the profession, that will not change. But it can help give a new prism to the decision-making that is made in our profession. I reassure you, we touch on subjects that are a little more advanced, so if I spoke Japanese for you, rest assured, it will not hinder your ability to do revenue management well for your seasonal rental. To finish answering your question, Fateh, in fact, the thing, too, is that there are areas of activity in which — I realized it when I started to create J' displays Complete and thinking about all the revenue management methods for seasonal rentals — we cannot ignore costs and charges. This is the case for seasonal rentals. I was nurtured and nurtured in revenue management, in outdoor advertising, and in the hotel industry at Club Med. In fact, we were very turnover oriented, because the teams were also extremely important. There were finance, control, management teams, etc. In seasonal rental, I immediately realized that in fact, you cannot have this perspective based exclusively on turnover, because we have a very important stake. There are others, but this is the strongest, that of cleaning. That is to say that if this cost of cleaning is not considered at all in this analysis of our overall property, in fact, we are missing out on something major for seasonal rentals. So concretely, to answer your question, revenue optimizing, I've never heard of that, but that doesn't mean it's any less good. Indeed, integrating costs into the notion of revenue management are things which, in large groups, may raise questions, which some revenue management consultants suggest or question. In any case, my experience with seasonal rental is that it is one of the areas where we cannot deny a certain number of cost aspects, notably the cost of cleaning. Because in fact, if we make the right decisions without considering these aspects, we may be led to make the wrong optimization decisions. I didn't expect to give such a long answer, but I hope I was transparent. Please let me know if there are things that are unclear.
− Yvon: 'I can't get the welcome bonus, exactly.'
It was sent to your email. If you have not received it, do not hesitate to send me a Facebook message indicating your email. I'm going to check that it was sent to you, and correct it if you haven't received it. But in any case, it's an email titled: your bonus. So, don't hesitate to look in spam, because it often happens that people tell me: 'I didn't receive it', and then we look, and in fact, it is received. But it could happen that it didn't work, so don't hesitate to alert me.
− Romain: 'Great, thank you. Another question: what do you think of tools like Pricelabs? Benefits ? Disadvantages?'
I made a video about this. Same, I don't remember the title. This is a video about automation. I think I titled this: Why are people lying to you about automation? I made a whole video on this. Don't hesitate to go look at it. It's: 'Why are we lying to you about automation?' It's one of the most watched videos, and I'm talking about my opinion on these tools: advantages, disadvantages, what does it bring, what to expect from it, and what can't we expect some.
− Fateh: 'Sorry. I meant 'Profit Optimizing.'
I understand better. So, profit optimizing is the optimization of profit. We could challenge this terminology by saying: 'Isn't this ultimately management control?' I'm not a huge expert in management control, but that's the question that arises. In any case, it's always interesting. Personally, I am always very in favor of immersing myself, of being interested in these new ways of rethinking everyone's profession. You are right to talk about it. It's really interesting.
− Hello Élise. Do you know a good concierge service in Rouen please?
Yes. I would like you to send me a few words about your situation by email helloatjannoncecomplet.com, and I will be happy to respond to you about the possibilities that could be available to you. I recommend, if you are ever in the same situation, concierge services with whom we work, therefore concierge services who do revenue management. Moreover, I also made a video that you can watch if you wish: how to choose the right seasonal rental concierge, where I give you all the information to help you choose a seasonal rental concierge? I explain that there are three aspects, in fact, to choosing a seasonal rental concierge service. The first is the operational part. Therefore, the concierge must carry out the operational business perfectly. The second is marketing, and therefore online marketing, and customer contact. And the third is revenue management. So, we work with concierge services that do revenue management, since they hire us to take care of revenue management and optimization of properties. So, this is also why I allow myself to share with people who are looking for the names of these concierge services, because they are very good quality concierge services, which I would recommend to my sister, to my parents . So.
I don't see any more questions. I hope that this video was able to help you, that it was also able to enlighten you on these subjects. It covers completely simple and basic realities. I think it's important to remember that. Let's drop all the complicated English words, because behind that, ultimately, there is a simple methodology and completely accessible things. This is the objective of this J'poster Complet channel, which aims to share, popularize, and allow you to access all of this. Don't hesitate to subscribe, and I'll see you tomorrow for the next video. I make a video from Sunday to Thursday, every day, except for a few unforeseen circumstances, but every day, a video to help us in that sense. See you tomorrow.