Hotel Revenue Glossary · Metrics

Yield

The actual revenue earned as a percentage of the maximum potential revenue. Yield is calculated by dividing actual room revenue by the theoretical revenue that would result if every available room were sold at rack rate. It captures both occupancy and rate discount effects in a single figure.

Why it matters: Yield provides a single measure of how close you are to capturing your theoretical maximum. A yield of 65% means you are leaving 35% of your potential revenue unrealized through a combination of empty rooms and discounted rates.

Worked example: Take a 150-room property with a A$320 rack rate. Potential revenue for one night is 150 x A$320 = A$48,000. You sell 108 rooms at an average A$204, so actual revenue is A$22,032 and yield is 22,032 / 48,000 = 45.9%. Drop the average to A$186 and sell 126 rooms instead: A$23,436, a yield of 48.8%. The extra 18 rooms bought more than the A$18 rate concession cost.

Common mistake: Treating a low yield as automatic underperformance. Yield is measured against rack rate, and plenty of properties carry a rack they never intend to sell. Lift rack from A$320 to A$420 and the same A$22,032 night falls from 45.9% to 35.0% yield without a single decision changing.

All glossary terms Yield Management RevPAR (Revenue Per Available Room) Rack Rate