Running Head: RM
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Revenue Management
Name
Institution
Date
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Revenue management (RM) in the hospitality and tourism industry has undergone a
significant transformation, especially with regard to best practices. RM, which had roots in the
airline industry in the 1970s as yield management, has subsequently grown into a comprehensive
practice encompassing hotels, restaurants, spas, conference centers, and other sectors within the
hospitality and tourism industry. According to Bulum et al. (2022), the use of RM has changed
from the optimization of output per available seat to a complex and widely used approach
exhibiting various aspects of the industry. This paper provides a critical review of the article by
Guillet and Mohammed (2014), providing its summary, analyzing key points, and drawing
conclusions that can extend the understanding of revenue management.
Summary of the Article
Guillet and Mohammed (2014) use a content analysis type of systematic literature review
to analyze the hospitality revenue management research in the last ten years. The key findings of
the literature review categorize the themes into two major dimensions: the core processes
captured by the revenue management process and the determinants of its practice. Guillet and
Mohammed (2014) classify topics by systematically reviewing the core activities of the RM
process and the factors shaping its development. This categorization further provides a
comprehensive overview and serves as an important map for practitioners and scholars to
navigate their way through existing literature and identify gaps in the knowledge domain.
According to Shum et al. (2023), content analysis includes looking for articles on major online
databases published in hospitality and tourism journals, evaluating relevant papers, and
reviewing the findings to identify what is known and where the gaps exist. This systematic
approach enables a comprehensive analysis of recent trends in a given industry (Campos et al.,
2022; Subying & Yoopetch, 2023).
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Analysis
The proposed approach of developing a unified framework offers a structured review that
acts as a practical guide for development practitioners and academics. The resulting framework
brings together the different components of revenue management, as well as identifying
inconsistencies and gaps in existing knowledge to enable future research (Tyagi & Bolia, 2021;
Han & Bai, 2022). As opposed to reviews that tended to target certain industries or journals, this
study covers a broader field of hospitality and tourism organizations, making it more
representative. The integrated concept proposed by the authors promotes uniformity in literature
and provides a platform for future research efforts in the ever-changing industry.
Core Activities of Hospitality Revenue Management
According to Nyanga et al. (2020), business analysis is an intelligence-gathering activity
critical for effective RM implementation as it encompasses the knowledge of market segments,
competitive forces, and the general business environment. An effective pricing strategy that fits
the market, customer segmentation as well as competitive environment is also crucial for revenue
management. Additionally, forecasting and comprehensively realizing the demand dynamics in
the market help maximize revenue through smart decision-making. The unified framework
ensures effective inventory and price management in terms of achieving maximum revenue with
due regard to market conditions and demand changes. It sets up controls for bookings to enhance
occupancy and revenue levels, with close consideration of overbooking conditions and
cancellation policies. According to Rosário and Raimundo (2021), such strategic management of
distribution channels further maximizes revenue opportunities by targeting customers effectively.
These integrated steps, coupled with performance analysis and evaluation of key performance
indicators and finance metrics to assess the effectiveness of implemented revenue management
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strategies, make the revenue management process effective. Effective strategic revenue
management further helps hospitality and tourism businesses create flexible pricing structures,
respond to dynamic market conditions on time, and achieve the best possible revenue potential
while using available resources efficiently (Bahar et al., 2021). As a whole, the activities support
the entire revenue management process through an organized approach to decision-making.
Determinants of Revenue Management
The unified framework for hotel revenue management lists several factors impacting the
revenue management process beyond the core activities. According to Klein et al. (2020), the
ability to understand market segments with unique needs and dynamics is essential for successful
revenue management. This involves understanding the price sensitivities of different market
segments, linking revenue management systems with other computerized systems, and quick
response to competitive pressures (Wu et al., 2020). Revenue management relies extensively on
external factors as drivers of practice. Therefore, organization-level strategy is also a key facet of
revenue management, as firms should be able to identify strategies that will help meet their goals
and vision. According to Shahwan (2021), other factors that influence revenue management
include legal issues, economic variables, and socio-cultural factors. It is crucial to comply with
legal frameworks, adjust strategies according to the fluctuations of economics, and comprehend
societal and cultural dynamics to manage revenues effectively.
Conclusion
The literature review of current works in hospitality and tourism revenue management by
Guillet and Mohammed (2014) is a major contribution to the field, offering a unified framework
and delineating central activities and revenue management external factors. This highlights the
fact that while internal considerations to do with core activities are very important, having a keen
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eye on the external environment in which they take place is equally critical. By understanding
and responding to these factors, the industry can improve the performance of their revenue
management programs for sustained growth in an industry that is constantly changing.
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References
Bahar, V. S., Nenonen, S., & Starr Jr, R. G. (2021). From channel integration to platform
integration: Capabilities required in hospitality. Industrial Marketing Management, 94,
19-40. https://doi.org/10.1016/j.indmarman.2021.02.003
Bulum, A. Z., Dugenci, M., & Ipek, M. (2022). Application of a Seat-based Booking Control
Mechanism in Rail Transport with Customer Diversion. Engineering, Technology &
Applied Science Research, 12(5), 9126-9135. https://doi.org/10.48084/etasr.5171
Campos, F., Lima Santos, L., Gomes, C., & Cardoso, L. (2022). Management Accounting
Practices in the Hospitality Industry: A Systematic Review and Critical Approach.
Tourism and Hospitality, 3(1), 243-264. https://doi.org/10.3390/tourhosp3010017
Denizci Guillet, B. (2020). An evolutionary analysis of revenue management research in
hospitality and tourism: is there a paradigm shift?. International Journal of
Contemporary Hospitality Management, 32(2), 560-587. https://doi.org/10.1108/IJCHM06-2019-0515
Denizci Guillet, B., & Mohammed, I. (2014). Revenue management research in hospitality and
tourism: A critical review of current literature and suggestions for future research.
International Journal of Contemporary Hospitality Management, 27(4), 526-560.
Han, W., & Bai, B. (2022). Pricing research in hospitality and tourism and marketing literature: a
systematic review and research agenda. International Journal of Contemporary
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Klein, R., Koch, S., Steinhardt, C., & Strauss, A. K. (2020). A review of revenue management:
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Rosário, A., & Raimundo, R. (2021). Consumer marketing strategy and E-commerce in the last
decade: a literature review. Journal of theoretical and applied electronic commerce
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Shahwan, Y. (2021). The impact of audit quality, corporate governance, and company
characteristics on earnings management. Global Journal of Economics & Business, 11(1).
https://www.refaad.com/Files/GJEB/GJEB-11-1-8.pdf
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https://doi.org/10.3390/su152015089
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Revenue and Pricing Management, 1-19.
https://link.springer.com/article/10.1057/s41272-021-00288-0
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