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The purpose of this paper is to provide a critical review of the performance management literature in the hospitality and tourism (H/T) industry.

The study is conducted through a critical literature review based on three dimensions: progress on ontological and epistemological issues, on the purpose of performance measurement (PM) and on the emerging contexts.

The progress on the three topics, namely, ontological and epistemological, purpose and emerging context, is addressed. Based on these three issues, the performance management literature in the H/T industry has not had any concrete structure. Few studies have been conducted reviewing the progress on performance criteria in the hotel industry. A research agenda is recommended to build a concrete structure in the field.

This study focused on only leading H/T journals to analyze the progress on the performance management literature in the H/T industry. The findings can help researchers (re)design research agendas to contribute to both mainstream performance management literature and literature related to the H/T industry.

This is one of the first studies highlighting the progress on the performance management literature in hospitality and tourism by considering ontological and epistemological issues, the purpose of PM and the emerging contexts.

This paper aims to demonstrate how hospitality management research could benefit from the propositional style of theorizing, and how this approach could expand the scope of research in the discipline.

Developing new theories could provide unique insights and broaden the scope of research in hospitality management. To illustrate the power of proposition-based theorizing, this methodology is applied to the hotel cancellation policies domain.

Using the proposition-based theorizing in the context of cancellation policies, this study provides several propositions that could have broad implications for future research.

The contribution of this paper is threefold. First, the potential benefit of the proposition-based theorizing in the revenue management context of cancellation policies is demonstrated. Second, the theoretical frameworks and insights from the product return policy literature that could enrich future studies on hotel cancellation policies are introduced. Finally, this study conjectures on these theories’ relevance to hotel cancellation policies and consequently on their potential contribution to the scholarly discourse.