Determinants of successful revenue management

Abstract

Purpose The aim of this paper is to define which characteristics of a hotel and staff organization determine successful revenue management (RM) implementation in urban hotels. Design/methodology/approach Multiple linear regression analysis was used to determine whether the characteristics of the hotel and the staff member in charge of RM are explanatory variables for the degree of RM implementation. Findings The findings show that hotel category, chain affiliation and the existence of qualified full-time staff are the determinants for successful RM implementation. The creation of the revenue manager position alone is not determinant in the degree of RM implementation, but his/her qualification and dedication are fundamental variables. Research limitations/implications Given that this survey was confined to the region of Madrid, it would be interesting to carry out similar research nationwide. Practical implications This study provides researchers and professionals guidance for the satisfactory implementation and use of RM, tailored to the characteristics of any given establishment. Therefore, this paper states that the creation of a qualified, on-site, full-time revenue manager position is crucial. Originality/value To the best of the authors’ knowledge, this is the first paper to conduct a formal statistical analysis of the relationship between hotel characteristics, staff organization and the degree of RM implementation. The greatest contribution of this research is the empirical demonstration that having a qualified full-time staff in charge of RM leads to better results in terms of RM implementation as opposed to not having one, having one part-time or having one at the corporate level. Therefore, this paper states that the creation of the professional revenue manager position within hotels is fundamental. Thus, the reported results provide a significant contribution to the literature related to the characteristics and organization of RM in hotels.

Digital transformation and revenue management: Evidence from the hotel industry

“…While Cleophas and Frank (2011) noted that sophisticated and automated systems can contribute to the success of RM, they advocated that dedicated software systems are not a prerequisite for applying RM. This is also confirmed in a recent study by Abad et al (2019). According to this study, having access to specific RM software does not correlate with higher RM implementation in hotels.…”

“…The divergent levels of sophistication are explained by key barriers, including the high cost of RM specific software, the divergence of views among revenue managers and senior management, and the market size. While previous research identifies cost as the principle constraint in the digital transformation in RM (Abad et al, 2019; Rodríguez-Algeciras and Talón-Ballestero, 2017; Talón-Ballestero and González-Serrano, 2013), the current study shows that other internal and external factors can also play a significant role.…”

“…Considering that RM is adopted more by luxury and upscale hotels (Abad et al, 2019; Ivanov and Ayas, 2017; Rodríguez-Algeciras and Talón-Ballestero, 2017), the sample was deliberately chosen from upper-tier hotels in Jordan. Hence, all five-star hotels across Jordan (37 hotels in March 2019) were contacted either by email, phone, or in person.…”

“…The second section included eight open-ended questions in line with the study’s objectives. Interview questions were developed based on mainstream literature on digital transformation (Hinings et al, 2018; Ivanov, 2019; Lam and Law, 2019; Matt et al, 2015) and literature on hotel RM (Abad et al, 2019; Emeksiz et al, 2006; Ivanov and Ayas, 2017; Rodríguez-Algeciras and Talón-Ballestero, 2017; Talón-Ballestero and González-Serrano, 2013). For instance, revenue managers were initially asked to talk about the history and intersection of RM and technology and the importance of digital transformation in RM.…”

“…While digital transformation may be regarded inevitable for hotels, the costs associated with hardware, software, recruitment, and training can be key constraints that prevent some businesses from digitalizing their RM operational models (Rodríguez-Algeciras and Talón-Ballestero, 2017). In their recent study on five-, four-, and three-star hotels in Madrid, Abad et al (2019) suggested that some hotels were reluctant to use advanced software because of the high cost. Similar findings were reported in other studies (e.g.…”