The Future of Revenue Management: A Case Study
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
This master thesis investigates important implications for how larger hotel chains can move from currently applying the revenue management (RM) function on hotel rooms, to also manage additional revenue streams and group reservations. The performed case study involves one of the largest hotel chains operating in the Nordic countries. Current research focus on how RM will develop in the future. It suggest that the coming RM movement will imply that RM will move towards being a more centralized strategic unit which focuses on function space (e.g. conference facilities), F&B, parking space etc., in addition to optimizing revenue generated from hotel rooms. Included are also problems associated with group reservations. Based on the current development a case study has been conducted at the hotel chain. Its main purpose is answering how hotels chains can move towards applying the RM function on revenue streams in addition to hotel rooms. Twenty in-depth semi-structured interviews with employees on different hierarchical levels provide results for what information is needed in order to perform the required assays, as well as if it is appropriate in this situation to assign price setting responsibility at a centralized RM function. Our findings suggest that current RM research, and consequently hotels and hotel chains, should not ignore the impact of price delegation when managing the price setting responsibility distribution between the RM and sales departments. Information asymmetry between the centralized RM and local sales departments (i.e. the sales department has an information advantage) entails implications for how price setting responsibility should be managed. As a result various degrees of price setting authority distribution can be considered. Delegating price setting authority to the salesforce further has a positive impact on profitability. Managing price delegation to the salesforce hoteliers must evaluate the salesperson’s motivation to respond to price delegation, as well as undesirable consequences which can be caused by difficulty of input measurement on the work done by the salesperson are managed.
Place, publisher, year, edition, pages
2013. , 72 p.
Revenue Management, Price delegation
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-126942OAI: oai:DiVA.org:kth-126942DiVA: diva2:642695
Master of Science in Engineering - Industrial Engineering and Management
Westin, Thomas, Associate Professor
Kullvén, Håkan, Associate Professor