YIELD MANAGEMENT AT NATIONAL CAR RENTAL
Faced with possible liquidation in 1993 by General Motors, its parent company, National Car Rental was under significant pressure to produce both a substantial and sustainable profit. To accomplish this, management decided to adopt a comprehensive revenue management system. Instead of a constant car rental price all the time, the revenue management system demonstrated that a variable pricing policy that would fluctuate with demand would result in significantly· higher profits.
The revenue management system was implemented in two phases. The first phase was introduced in July 1993, with the goal of showing immediate profits, which it did. The second phase focused on developing a state-of-the art revenue management system for the car rental industry. This phase was successfully implemented in July 1994. As a result of revenue management system, profits were significantly increased, and General Moors was able to sell National Car Rental in 1995 for 3Il amount in excess of $1 billion.
In order to take maximum advantage of yield management, a service should have the following characteristics: (a) the ability to management its markets. (b) high-fixed and low variable costs, (c) product perishability, and (d) the ability to presell capacity.