Quadratic models for yield management in hotel rooms operation

In the hospitality literature there are no consistent definitions and interpretations of yield management. This study reviews yield management in its various perceptions and analyses the drawbacks of the yield statistic currently used in the industry. The paper further develops two quadratic models for yield management: one for optimising room revenue and the other for optimising room profit. Based on the two models, new yield statistics of revenue maximisation and profit maximisation are proposed. The task of yield management is to achieve a yield statistic close to 1 so as to maximise room revenue and profits. © 1998 John Wiley & Sons, Ltd.