Hotel Revenue Management: From Theory to Practice

Citation

J.I. van der Rest, X.L. Wang, Z. Schwartz, M. Jooste and L. Koupriouchina (2015), "Hotel Revenue Management: From Theory to Practice", International Journal of Contemporary Hospitality Management, Vol. 27 No. 5, pp. 1048-1050. https://doi.org/10.1108/IJCHM-03-2015-0108

Revenue management is an essential aspect of running hotels and a vital area of study for hospitality management professionals. In recent years, the field has become significantly more complex, multidisciplinary and analytical. With customers making more informed choices facilitated by the rapid technological advancement, revenue management increasingly plays a strategic role in hotel management practice affecting yields from all revenue streams (Kimes, 2011).

Hotel Revenue Management: From Theory to Practice focuses on bridging the gap between theory and practice. It is a timely addition to revenue management learning resources that provides hotel managers, hospitality management scholars and students with a comprehensive guide. The author explains the fundamental concepts and evaluates revenue management practices in a hotel operating context.

The comprehensive book contains 16 chapters. It begins with two chapters introducing revenue management and its economic fundamentals. Chapters 3 to 5 cover hotel revenue management systems, process and metrics. Chapter 6 provides a detailed discussion of market segmentation criteria and the specific segments. The seventh chapter elucidates the information that is required for various dimensions in revenue management processes and the importance of having the right information in order to make good revenue management decisions. Chapter 8 explains the various time horizons at which revenue management is performed, and how these horizons differ from each other. This approach is extended in Chapter 9, which describes various (structural) forecasting methods. Chapter 10 introduces the role of value in pricing and how customers select hotels. Chapters 11 to 13 deliberate on pricing, non-pricing and combined hotel revenue management tools. Chapter 14 elaborates on managing revenues in various hotel revenue management centers. Chapter 15 discusses issues related to ethics and relationship marketing. The monograph concludes with a description and analysis of revenue practices of accommodation establishments in Bulgaria.

This e-book is one of the few textbooks that comprehensively covers many aspects of hotel revenue management (Hayes and Miller, 2011; Legoherel et al., 2013; Tranter et al., 2009). It is written in a reader-friendly style, without the diminution of the subject. A noted strength of this book is the excellent literature review and that each topic area is thoroughly discussed. The author successfully develops an integrative framework of hotel revenue management. Given the wide range of topics covered in this book, this is quite an accomplishment. It is also commendable that the author is not “afraid” to discuss the mathematical details of several key topics such as pricing, optimization and overbooking and does a fair job outlining the math and often the intuition or the meaning behind some of the models.

A weaker part of the book is its primary focus on the academic perspective. How revenue management is practiced in hotels, in a real-life context, could be better explained and with more examples. The subtitle “From Theory to Practice” suggests that this is a book that will explain the theory of revenue management and demonstrate how it is implemented in practice, though this may not necessarily be the case. While the book offers a comprehensive explanation of the theory and how it relates to hotels in general, there is little discussion on how revenue management is carried out in practice, and its real-life issues. In other words, the author makes great effort in citing references and at times provides very useful overviews of the existing literature and research methodology for certain topics. For students, this approach is useful and recommended, but the book does not explain how to apply revenue management theory in practice. That said, the final chapter, revenue management practices in Bulgaria, is an interesting and informative addition. However, it might be better presented as a case study. Another issue is that the level of in-depth/mathematical discussion is not equally applied across the topics. For example, the discussion on forecasting lacks the level or rigor as found in other parts (e.g. overbooking).

Overall, this is a well-written book. It covers key aspects of hotel revenue management, each topic area is evaluated with emphasis on the academic literature, and the material flows logically. The audience that will benefit the most from this book is represented by professionals (academia or industry) who may not necessarily work directly with revenue management but are in need of gaining a general understanding of revenue management and the main surrounding issues. The book will also be a valuable reference source to the wider revenue management research community. On the whole, this monograph paves the way to the new materials to address the current need for a book that will serve as a practical introduction to revenue management where theory, references, frameworks and lists (as was done well in this book) are accompanied with concrete examples, real-world-based cases and exercises for students and business practitioners who wish to acquire hands-on skills. These cases and exercises should focus on providing ground for training on how to deal with contemporary revenue management challenges and help to think analytically and to make informed decisions incorporating various sources of information. Given the shortage in comprehensive, updated and rigorous work on the topic, this text is a valuable addition to the revenue management literature.