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.

Citation

Ortega, B. (2016), "Revenue management systems and hotel performance in the economic downturn", International Journal of Contemporary Hospitality Management, Vol. 28 No. 4, pp. 658-680. https://doi.org/10.1108/IJCHM-07-2014-0324