Revenue management systems and hotel performance in the economic downturn

Abstract

Purpose The purpose of this paper is to analyse whether hotels that use a revenue management system (RMS) outperform non-RMS-users in a context of decreasing demand. Design/methodology/approach A database of chain hotels with a rating of three or more stars was used to estimate MANOVA and ANOVA models to analyse the role of RMSs in hotel performance. Findings In a context of strong competition in prices and surplus capacity, the findings suggest that RMSs have been more effective in improving occupancy than in achieving higher rates. Also, the use of RMSs did not have a significant impact on hotel labour productivity. Research limitations/implications Managers may believe that they have adopted an RMS when, in fact, they have not fully done so. In addition, establishment-level unobserved heterogeneity, such as the quality of management or unobserved quality of service, cannot be fully controlled because of the nature of the data used. The main implication of this paper is that the potential of RMSs as revenue enhancer might be influenced by unstable market and economic conditions. However, the absence of significant effects on RevPAR performance might be also the result of firms’ adopting inadequate RM strategies. Further research could investigate whether the findings are context-specific or whether firms are failing to implement effective RMSs for other reasons. Originality/value The approach used in this paper is new to the literature, given that it uses statistical methods to analyse the impact of implementing an RMS on hotel performance under specific economic conditions and using alternative indicators.

Determinants of revenue management practices and their impacts on the financial performance of hotels in Kenya: a proposed theoretical framework

“…Throughout the years, researchers have confirmed an association between factors shaping contingency and performance in different organizations [6][7][8][9]. Last, this paper responds to earlier demands for more studies of the hotel sector related to practices of revenue management [10][11][12].…”

“…More empirical studies in hospitality management should be done with a focus on key areas such as policy execution in RM [11]. Future empirical studies on RM should scrutinize whether findings are based on conditions of the hotel sectors or if hotels are failing to implement practical RM systems for various motives [12]. Research on the growing significance of ancillary hotel revenue has been limited.…”

“…There is a continuous demand for empirical investigations on revenue management in the hospitality sector. Further, there is limited research on RM practices applied in the hotel sector from [10][11][12]. Therefore, a wide gap exists between the hypothetical development of RM and authentic applications of RM in hotels as highlighted by academicians and professionals, laying a foundation for the development of our theoretical framework.…”

“…The performance of a hotel is measured based on the total activities of various sub-sectors of the hotel industry [40]. In the recent past, researchers have carried out various studies on hotel performance and its metrics [12,33,[41][42][43][44]. A mixed-method strategy that involves implementation strategies is linked to the highest levels of RevPAR [33].…”

“…Several scholars have studied and found an association between hotel performance and RM practices, including payment policies regarding reservations [11], policies related to RM [49], pricing policies [50], revenue forecasting techniques [51], price optimization [52], social media strategies [29], accurate demand forecasting [53], non-mixed pricing [54], forecasting [55], RM system user benefit measurement [12], procedural room revenue maximization [56], and enhanced frameworks for the management of demand and optimization of prices [57].…”