I've spent a lot of time researching the economics of information and one of the interesting things that popped out of that was when I looked at yield management, as a research topic, I realized that that is what information markets would look like when mature.

yield management is the exercise you do when your - the individual hotel's - distribution system is set up perfectly and humming along. The biggest gains for hotels happen actually when they set their mind to it that they want to shift the source of their business away from the OTAs to more direct business: direct can be the online booking tool on their own hotel website, mails, repeat customers, phone calls. yes even phone calls, that should be one of the goals when setting up a mobile hotel website.

To achieve this hotels should invest in a decent website, start blogging with a voice that they cultivate over time and go for better rankings in the SERPs. That, plus a humming hotel operation with systems in place to handle the direct business is the way to go.

This way even smallish properties can run circles arround bigger competitors. The bigger hotels have a hard time to copy this, as they are not as agile, and need meetings to figure out a "social media strategy".

Figure I know quite a bit on how to make hotels way more independent of OTAs as a booking source: this is actually the core of my SaaS offering: http://www.igumbi.com . It is an online pms, revenue/ yield management system and has a online booking tool for the hotel website. JSONP based and no sucky flash or iframe.

The most important aspect of the yield management architecture I find to be the use of nesting. It's a very flexible, value based approach on assigning fixed capacties to sellable allotments. This robust inventory algorithm, devised by MIT's Belobaba, is the thing that executes the yiled management settings. And I totally agree with the use of loyalty programs and direct chstomer interaction. That's why we also have a mailchimp list integration, so it becomes virtually a no brainer to keep your mailing list up to date in he daily business operations

Just a heads up, you and your clients are taking credit card information over unencrypted HTTP.

Here are two examples of clients that are accepting credit card info over plain HTTP: http://vox-hotels.com/ http://www.sonnseit.at/

Hey thanx for pointing that out. The booking tool is actually tied in via https and the transmission back to the system happens via https. I need to pester my clients to set up the cert for their domain. I will also the insert a another step in the dialogue - to collect that info.

I own a small hotel in Europe and we are looking for a PMS. Does your software sync the availabilities with the major booking sites? Is your software in English?

Yes the software is fully translated into English (The marketing site not yet). Syncing with booking sites works via an Austrian channel manager. I have two other channel manager tools in the pipeline, will be out later this year.

who is your typical customer?

Small independent Hotels, Apartments & Fincas. Mostly in Austria, Germany, recently Spain and Switzerland. Properties between 1 and 30 units. Typically they are looking for a management approach that helps them to handle the reservations remotely. 1-4 Staff are dealing with the reservations.

Is that interview question supposed to be for programmers or account managers? Is there a difference?

I can't imagine how answering that question correctly indicates a good candidate for software engineer.

It's a joke, patterned off the famous "Estimate how many golf balls fit in a schoolbus" interview questions that are just windows into how candidates would think about such things. (They're terrible questions for engineers. Don't ask them.)

The dual purpose of the joke is that, if you played it straight, you'd probably come up with a number in or near the millions, which I am suggesting is a reasonably achievable result from comparatively trivial optimization work applied at scale. (That's sort of a thing for me.)

Why on earth would you want to sell out all rooms as a goal?

There's an implicit "for the best price each room could possibly bring" attached to that goal. The reasoning is basically that the cost of a hotel room (construction, upkeep, etc) is not affected too much by whether it is occupied or not. (In that way it's very similar to a seat on an airliner.) So considering your costs as a hotel operator are nearly fixed, you're quite obviously better off selling 50 rooms at $200 and then 50 more rooms at $100, than if you had kept the price at $200 and only been able to sell the first 50 rooms. Of course in the real world the pricing strategies are a lot more complicated than that and depend on having good models for how many people are willing to pay what price, and when.

I must be missing something here. How does an empty room make any money?

I first realized this concept on much simpler level. In college, my older friend and I were slowing waking up after a very successful party. There was one beer left. And I said, "That would perfect if we had zero beer left". He replied, "No, one beer is perfect. It means everyone got enough. If there were zero then that means someone could have tried to get a beer after we ran out. With one left, we know that everyone got exactly as much as they wanted."

In many occupancy-based price optimization algorithms (at least in the multi-family sector where I previously worked), it is not optimal to maintain 100% occupancy. It doesn't allow much flexibility. I've seen recommendations for apartments around 95% to cope with fee changing, turn over maintenance etc. I'm sure hotels are in a similar situation (but have even lower percentage due to guest volatility).

If a guest knows they can get a better rate they will force you to drive down rates longterm. Also if you sell out, that means you could have charged more and made more in net