Exploration of revenue management practices – case of an upscale budget hotel chain

Abstract

Purpose – The purpose of this study is to investigate the implementation of revenue management (RM) pricing practices and managers’ perceptions towards this practice in a budget hotel chain and to provide recommendations for improving the adoption of and perception towards this practice. Design/methodology/approach – A single case study method was adopted to conduct an in-depth qualitative research in a hotel organization. In-depth data were collected through semi-structured interviews, observations and documentation. Findings – The research findings indicate that the implementation of revenue management system (RMS): needs to be clearly communicated and made tangible to employees; can impact the profitability of the budget hotel sector and not only mid-scale or luxury sectors; and remains a profit-oriented decision with little consideration for customer outcomes. Research limitations/implications – The findings may not apply to mid-scale or luxury properties, as the results cannot be generalized to other hotel chains in other countries that apply complex pricing structures. Future research might develop multiple case study design to increase the rigor of the research by focusing on themes or patterns uncovered in a single case study. Practical implications – The practical application of the study is twofold: the recommendation to maintain ongoing implementation activities, such as designing operational plans and training programs; the recommendation for a RM pricing strategy that maintains positive price fairness perceptions and results in positive behavioral intentions. Originality/value – This study helps advance our understanding of the characteristics that influence the success of RM implementation in the budget hotel context and provides us with useful insights to design effective dynamic strategies to enhance the implementation process both for the organization and its stakeholders.

Homogeneous service with heterogeneous products: Relationships among airline ticket fares and purchase fences

“…The objective here is to ensure that customers are satisfied with the provided service and do not feel ripped off (Haddad, 2015). This is because if passengers perceive differential pricing with attached fences as fair, they are more willing to accept the practice and increase the purchase intention (Chung and Petrick, 2012).…”

“…In addition, Kimes (2005) also show that the utilization of RM may bring 3%e5% extra revenues in the airline, hotel, and rental car industries. With obvious potential for revenue increase, the application of RM has become popular and widespread in many other fields (Chiang et al, 2007;Anderson and Xie, 2010;Cross et al, 2011;Haddad, 2015).…”

Using dynamic pricing to target off-peak hours in a brick-and-mortar service environment to increase revenue

“…Prices should be set so that customers are paying the price they are willing to pay rather than anything less. (Baker & Collier, 2003;Cleophas et al, 2017;Cross, 1997;Elmaghraby & Keskinocak, 2003;Kimes, 1989;Ng et al, 2018;Rania El Haddad, 2015;Yeoman et al, 2001Yeoman et al, , 2001 Businesses need a valid reason for increasing prices more than for the sake of increasing revenue.…”

Revenue management, pricing and the consumer

“…The principle of dual entitlement states that most customers believe they are entitled to a reasonable price and the firm is entitled to a reasonable profit (Kahneman et al, 1986a, b as cited by Wirtz and Kimes, 2007, p. 231). While the reference concept reflects how a buyer uses a perceived reference price or reference transaction (Kimes and Wirtz, 2003) and the seller's actual prices (Martin-Consuegra et al, 2007) to identify how just the price is (Haddad, 2015).…”