Revenue Management in U.S. Hotels: 2001 - 2005

Abstract

Revenue management is executed more closely on average by hotels that price above their competitive set than by those that price below their competitive set. This observation holds true in each year from 2001 through 2005, even as the economic situation of the industry first deteriorated and then improved markedly. There are no differences in the results during economic downturns or rebounds in the lodging industry. However, the degree of revenue management as defined by the correlation between average daily rate (ADR) and occupancy varies across market price segments. In addition, for each hotel price segment the degree of revenue management is greater for those hotels that perform better than their competitors. This provides empirical evidence that revenue management strategies are more prevalent in higher performing hotels.