The adoption of THRM and its impacts on the business process

i

Oxford School of Hospitality Management

Oxford Brookes University

FROM REVENUE MANAGEMENT TO REVENUE STRATEGY: THE EFFECTS OF

THE ADOPTION OF TOTAL HOTEL REVENUE MANAGEMENT ON THE

REVENUE MANAGEMENT PROCESS AND SYNERGISTIC ELEMENTS OF ITS

SYSTEMIC FRAMEWORK

Guillaume Genin

2014/2015

This dissertation is submitted in part fulfilment of the requirements for the Master's

Degree in International Hotel and Tourism Management

ii

DECLARATION

This dissertation is the result of my own independent work. Where material other

than my own work has been used it is appropriately attributed and referenced in the

text.

I agree that this dissertation may be made available for reference and photocopying

at the discretion of the Head of School, who will only give permission for such

reproduction to the extent which s/he considers fair and reasonable.

Guillaume Genin

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ACKNOWLEDGEMENTS

Completing this research project has taken me on a notable personal and

professional experience that was made possible through the support of academic

supervisors and mentors. I have learned much from my dissertation supervisor, Dr.

Kate Ringham, from academics of the Oxford School of Hospitality Management, Dr.

Judie Gannon and Dr. Peter Lugosi, and would like to thank these three educators

for their time and input.

I have also received much assistance from twenty eight anonymous revenue

managers who contributed in this research project whom I would particularly like to

acknowledge.

Thank you to Jade Williamson and Tracy Wang for their insights and wisdom

regarding the area of Revenue Management.

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ABSTRACT

The adoption of Total Hotel Revenue Management (THRM) seems to reshape the

way revenue managers approach the Revenue Management (RM) process. This

research project investigates how the adoption of THRM affects the RM process and

synergistic elements of its systemic framework. The literature review identifies key

areas in which THRM may impact the RM process such as prerequisites

development, objectives, data collection and analysis, forecasts, decisions,

implementations, inventory and distribution management, evaluation of results and

monitoring of activities and strategies. In addition to this, synergistic elements to the

RM process that are comprised in the RM systemic framework are acknowledged

and explored. As academics did not investigate the effects of the adoption of THRM

on the aforementioned elements, this research project answers the problematic

through pragmatic research philosophy aligned with mixed methods involving online

self-administered surveys and semi-structured interviews. The discussion of results

and findings will then be supported by merged insights and developed models based

on the literature-based hypothesis. Key results and findings exhibit the high

correlation between the adoption of THRM and guest-centric RM, significant impacts

on RM software, performance metrics, teams and revenue managers, and the three

first stages of the RM process, namely: prerequisites development, definition of

objectives with data collection and analysis, and demand forecasts. The adoption of

THRM therefore results in the evolution of the RM process and synergistic

implications.

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CONTENTS

CHAPTER 1 .............................................................................................................. 1

GENERAL INTRODUCTION ..................................................................................... 1

1.1 Research Background ..................................................................................... 1

1.2 Aims and Objectives ........................................................................................ 3

1.3 Structure of the Dissertation ............................................................................ 4

CHAPTER 2 .............................................................................................................. 5

REVIEW OF THE LITERATURE ............................................................................... 5

2.1 Introduction to the Literature ............................................................................ 5

2.2 The Development of Hotel Revenue Management .......................................... 7

2.2.1 Understand Revenue Management ........................................................... 7

2.2.2 Operate Revenue Management ................................................................ 7

2.2.3 Adopt Hotel Revenue Management .......................................................... 8

2.2.4 Adopt Total Hotel Revenue Management .................................................. 9

2.3 The Revenue Management Process in its Systemic Framework ................... 10

2.3.1 Introduction to the Revenue Management Systemic Framework ............. 10

2.3.2 Revenue IT Systems ............................................................................... 12

2.3.3 Knowledge and Data ............................................................................... 13

2.3.4 Revenue Practices .................................................................................. 14

2.3.5 Revenue Centres .................................................................................... 18

2.3.6 Revenue Team ....................................................................................... 19

2.3.7 Guest-centric Revenue Management ...................................................... 20

2.3.8 Ethics in Revenue Management .............................................................. 20

2.4 The Revenue Management Process .............................................................. 22

2.4.1 Process A................................................................................................ 23

2.4.2 Process B................................................................................................ 24

2.4.3 Process C ............................................................................................... 25

2.4.4 Process D ............................................................................................... 27

2.4.5 Process E................................................................................................ 28

2.5 The Stages of the Developed Revenue Management Process ...................... 30

2.5.1 Prerequisites, Market Segmentation and Pricing ..................................... 30

2.5.2 Define Objectives, Collect Information, and Analyse ............................... 32

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2.5.3 Forecast .................................................................................................. 32

2.5.4 Decide and Provide Solutions ................................................................. 34

2.5.5 Implement ............................................................................................... 35

2.5.6 Manage Inventory and Distribution .......................................................... 35

2.5.7 Monitor, Reflect on Results, and Adjust Strategies .................................. 36

2.6 Conclusion of the Literature ....................................................................... 36

CHAPTER 3 ............................................................................................................ 37

RESEARCH AND METHODOLOGY ....................................................................... 37

3.1 Introduction to Research and Methodology .................................................... 37

3.2 Classification of Research Categories ........................................................... 38

3.3 Inductive and Deductive Approaches ............................................................. 40

3.4 Research Philosophies .................................................................................. 41

3.5 Qualitative and Quantitative Approaches ....................................................... 45

3.6 Mixed Methods Research Design .................................................................. 46

3.7 Stage 1: Quantitative Research Method ........................................................ 48

3.8 Stage 2: Qualitative Research Method .......................................................... 50

3.9 Conclusion of Research and Methodology ..................................................... 51

CHAPTER 4 ............................................................................................................ 51

RESULTS, FINDINGS AND DISCUSSION ............................................................. 51

4.1 Introduction to the Chapter ............................................................................ 51

4.2 Quantitative Results and Discussion .............................................................. 52

4.2.1 Introductory Questions ............................................................................ 52

4.2.3 Impacts on the elements of the Revenue Management framework ......... 58

4.2.4 Impacts on the overall Revenue Management process ........................... 62

4.2.5 Impacts on the stages of the RM process................................................ 64

4.2.6 Conclusions of Quantitative Results and Discussion ............................... 66

4.3 Qualitative Findings and Discussion ........................................................... 66

4.3.1 Revenue IT systems ............................................................................... 67

4.3.2 Performance metrics ............................................................................... 68

4.3.3 Teams and Human Resources concerns ................................................ 70

4.3.4 Guest-centric Revenue Management ...................................................... 71

4.3.5 Stage 1 of the RM process: prerequisites, market segmentation and

pricing .............................................................................................................. 73

4.3.6 Stage 2 of the RM process: define objectives and data collection and

analysis ............................................................................................................ 74

4.3.7 Stage 3 of the RM process: forecast ....................................................... 75

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4.3.8 Conclusions of qualitative findings .......................................................... 76

4.4 Conclusions of Results, Findings and Discussion ...................................... 77

CHAPTER 5 ............................................................................................................ 77

GENERAL CONCLUSION, LIMITATIONS, AND FUTURE RESEARCH ................. 77

5.1 Conclusions of the Research Project ......................................................... 77

5.2 Limitations of the Research Project ............................................................ 79

5.3 Future Research ........................................................................................ 80

REFERENCES: ...................................................................................................... 81

APPENDICES ......................................................................................................... 93

Appendix 1: Academic Research Landscape of the RMSF elements ...................... 93

Appendix 2: Academic Research Landscape of RM Practices ................................ 94

Appendix 3: Ethical and Unethical Revenue Management Application .................... 95

Appendix 4: Academic Research Landscape of the elements of RM Forecasts ...... 96

Appendix 5: The Research “Onion” ......................................................................... 97

Appendix 6: Comparison of Four Research Philosophies in Management Research

............................................................................................................................... 98

Appendix 7: Major Difference between Deductive and Inductive Approaches to

Research ................................................................................................................ 99

Appendix 8: Quantitative Research Protocol ......................................................... 100

Appendix 9: Survey proposed to 28 hotel revenue managers ............................... 101

Appendix 10: Semi-structured Interview Guide...................................................... 106

Appendix 11: Ethics in Quantitative and Qualitative Research .............................. 109

Appendix 12: Quantified Results of the Surveys (28 responses) ........................... 111

1

CHAPTER 1

GENERAL INTRODUCTION

1.1 Research Background

The definition of Revenue Management (RM) has changed over time as its practice

as evolved from optimising the amount of gains which can be measured by the

Average Daily Rate (ADR) to maximising profit with an emphasis on all revenue

streams and not only accommodation revenues (Anderson and Xie, 2010).

Academics define RM as “the selective use of pricing and other techniques to

influence customer demand for a company’s products and services in order to

increase both total revenues and profits.” (Huefner, 2014, p.17). Practitioners

describe it as “an economic discipline appropriate to many service industries in

which “market segment pricing” is combined with statistical analysis to expand the

market for the service and increase the revenue per unit of available capacity.”

(IDeaS, 2005, p.4). The function is significantly changing from a tactical capacity and

pricing focus to a more strategic discipline which incorporates Customer Relationship

Management (CRM) and embrace a Total Hotel Revenue Management (THRM)

approach (Kimes, 2011). In the light of this, Orkin (2006, p.158) declared: “A future

vision for revenue management speaks of a day when each guest is a market

segment of one and the availability of rates for a requested stay would depend on a

guest’s past history or forecasted future with the hotel”.

RM can now be thought as individual guest behaviour management through pricing

and the availability of constrained supplies to optimise gains (Anderson and Xie,

2010). While the airline industry has been at the prominence of research and

progression of this business discipline, the lodging industry effectively applied its

methods (Anderson and Xie, 2010). Orkin (1988) introduced the yield statistic, an

earlier version of the present centre of attention to Revenue Per Available Room

(RevPAR). The yield statistic was a multi-part element of occupancy and price for

performance measurement, finding the quotient of total profit by the profit potential,

having the profit potential categorised as the multiplication of rack rate by total

number of rooms (Orkin, 1988). Eric Orkin draws around numerous conceptual tools

used in today’s practice of RM, showing the path to hotels’ requirement to focus on

key scopes, namely: forecast, systems and processes, as well as tactical and

strategic schemes (Anderson and Xie, 2010).

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The genesis of RM or yield management started within the airline industry almost

sixty five years ago (Anderson and Xie, 2010). Since then, this business discipline

has reached other industries related to hospitality, especially hotels and cars for

rental. In the recent past, unconventional service sectors such as gambling houses,

golf clubs, and food and beverage outlets have started to accommodate RM

principles and techniques into their selling process (Anderson and Xie, 2010). The

first research referred to hotel RM conceptual principles and was released in 1988 by

the Cornell Hospitality Quarterly. This research explores RM concepts, paying

exclusive attention to demand and setting the steps of the current emphasis on

RevPAR as a crucial pricing strategy (Orkin, 1988). The Cornell Quarterly

publications on RM have subsequently seen themselves increase to a greater

amount of studies, covering various RM concepts and aiming at diverse kinds of

revenue centres activities and not the optimisation of hotel rooms alone. This reflects

the chronologic and gradual appearance of THRM which encompasses all revenue

streams such as rooms, food and beverage outlets, spa services, golf courses, and

gambling services (Noone et al., 2011).

However, a research gap has been identified and although THRM concurrently with

the evolution of RM seem to be of paramount importance in the area of hotel

revenue optimisation, there is a significant lack of academic and practitioner

research in the field. Research in yield management is scattered and seems to fall

behind the practice as only two academic articles allude briefly to the adoption of

THRM (Kimes, 2011; Noone et al., 2011). In this regard, Academics have mainly

investigated RM in the hospitality industry but there is however a significant lack of

research in revenue centres other than rooms division and there are not any entire

research dedicated to THRM alone. In the lodging industry, RM is identified as the

most significant field for the practices and processes of operations (Helsel et al.,

2006). It is such an important part of a hotel that, in many cases, it prescribes the

processes, practices, communication and tasks that support the optimisation of

revenue centres (Helsel et al., 2006). In the light of this, current general managers

share the opinion that operating RM more strategically and considering the

optimisation of all revenue centres are beneficial (Helsel et al., 2006). Despite this,

scholars and practitioners did not examine the impacts of the adoption of THRM on

the original tactical inventory and pricing focused RM process and synergistic

aspects of the RM environment. This reason justifies the interest of carrying out a

research project on the aforementioned adoption. However, extensive academic and

practitioner research in RM may provide indications on where the impacts of the

3

adoption of THRM on the RM process and some inseparable elements of its

environment are located.

1.2 Aims and Objectives

The aim of this research project is to investigate how the adoption of THRM affects

the original room focused RM process and some inseparable and synergistic

elements of the RM systemic framework such as revenue Information Technology

(IT) systems, teams and revenue managers, performance metrics, data and guests’

implications. In order to meet this aim, the dissertation achieves subsequent

objectives that are comprised within each of the following chapters.

The first objective is to review the literature and discuss current thinking in RM in

order to orientate this dissertation towards a sensible and reliable hypothesis that will

be developed upon academic and practitioner research. The review of the literature

is consequently focused on the RM process and synergistic aspects of the RM

systemic framework to allow the completion of this objective. The hypothesis

developed on the basis of the literature allows the identification of how and where

the impacts of the adoption of THRM are on the aforementioned elements of RM.

The second objective consists of discussing research methods and identifying the

most appropriate research approach, philosophy and method to address the

problematic.

The third objective involves the identification and assessment of the effects and

influence of the adoption of THRM on the RM process, its synergistic aspects, and

more specifically how the adoption of THRM contributed to the evolution of the RM

process and its implications. This third objective is composed of three subsequent

sub-objectives: The first sub-objective involves the collection and analysis of

objective information from revenue managers and allows the investigation of their

perceptions on the aforementioned problematic. The second sub-objective implies

the collection and analysis of subjective information from revenue managers, and

permits a more in depth exploration of the most significant impacts of the adoption of

THRM on the RM process and its synergistic elements. Those most significant

impacts are identified through the completion of the first sub-objective. Finally, the

third sub-objective consists of discussing the results and findings of the first and

second sub-objectives and how they relate to the problematic and whether they

confirm or not the literature-based hypothesis.

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1.3 Structure of the Dissertation

This dissertation is composed of five chapters, including a general introduction and a

general conclusion. The present general introduction outlines the research

background, rationale of the study, research gap, aim and objectives and summarise

the structure of the chapters.

The first chapter is composed of four parts and starts with a first part which reviews

current thinking regarding the development of RM and provides some background

and depth in the discipline in order to offer a comprehensive understanding of it. The

second part consists of critically reviewing the literature regarding the RM

environment, justifying the inseparable and synergistic elements to the RM process

and producing a first model of RM as a systemic framework. In the light of this, the

third part reviews critically current thinking regarding RM processes which is

eventually merged with the second part and model. This merging produces a

dynamic, comprehensive and universal model of the RM process that supports the

hypothesis based on the literature as well as the overall dissertation. Finally, the

fourth part consists of reviewing the literature on the various steps of the universal

model of the RM process created previously. Each heading and sub-heading of the

literature review reflects the hypothesis which consists of assuming that the adoption

of THRM impacts on each of the reviewed elements due to their emergence in

academic and practitioner research.

The second chapter discusses alternative research methodologies and approaches

and how the research approach, philosophy and methods selected address the

problematic. This is comprised of seven parts and begins with the classification and

identification of research types. The second part discusses inductive and deductive

research approaches while the third part explores research philosophies and

validates which ones are matching with the problematic of the dissertation. In

addition to this, the fourth part investigates qualitative and quantitative research and

identifies that the combination of both research methods matches with the aim of the

study. Finally, the fifth part justifies the use of a mixed methods research design and

this is followed in the last two parts which present the quantitative and qualitative

methods employed to drive the research.

The following chapter exhibits how the results and findings were generated and how

they relate to the problematic of the dissertation and to the developed hypothesis

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based on the review of the literature. In this regard, quantitative results,

qualitative findings and the discussion are combined in one interconnected chapter

as it seemed to meet the mixed methods approach in a better way, as well as

avoiding repetition. This combination also provides a more comprehensive

understanding of the results and findings which are directly related to the aim of the

study and to previous academic and practitioner research.

The general conclusion draws conclusions related to the original aim and objectives,

highlights the limitations of this research project and provides recommendations for

future research. Moreover, each chapter comprises an introduction and a conclusion

in order to put insights into perspective. Finally, an array of appendices is available

at the end of the dissertation in order to provide complimentary knowledge and

information regarding specific chapters and sections of the dissertation.

CHAPTER 2

REVIEW OF THE LITERATURE

2.1 Introduction to the Literature

The present research aims to identify how the adoption of THRM impacts the RM

process and some inseparable elements of the RM framework. A research gap has

been identified and although THRM seems to be of paramount importance in hotel

revenue optimisation, there is a significant lack of academic and practitioner

research in the area (Kimes, 2011). This reason justifies the interest of carrying out a

research project on the aforementioned adoption. However, extensive academic and

practitioner research in RM may provide indications on where the impacts of the

aforementioned adoption could be. The objective is to develop a theory based on the

literature and test it through quantitative research in a first time. In a second time, the

first test of the theory that constitute quantitative results will be processed through

qualitative research in order to provide further knowledge and understanding of the

occurrence, test the theory a second time, and answer to the research aims and

objectives more accurately. This consequently involves a pragmatic research

philosophy aligned with mixed methods research and the literature review will be

progressive towards the research goals while reflecting the research instruments

(Saunders et al., 2009). Moreover, the quality of this research project relies on

reliable and advanced research from both academics and practitioners. The

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literature is consequently composed of only verified and published academic articles

and books as well as industry leaders’ insights with practitioner manuals.

The most previous studies in the discipline of RM in the hospitality industry cover

numerous aspects from practitioner to academic perspectives. While yield

management is extensively developed as a business discipline or as a theoretical

framework in the airline industry, it has not been considered enough in the area of

the lodging industry. Research in yield management is scattered and seems to fall

behind the practice in the field. In the light of this, the following literature review aims

to critically assess hotel RM research at both theoretical and business levels in order

to identify discrepancies in the literature, develop a logical structure of it in line with

the problematic and build the research instruments of the present research project.

However, the limitations of the research are represented by an important lack of

literature on THRM as most research has been driven only on RM applied to room

revenues. The developed theory based on the literature which plays a role of

indicator is hypothetical and will be verified due to the absence of literature on

THRM.

The literature review is structured around the development of RM, some aspects of

the hotel RM environment or systemic framework that are inseparable to the RM

process, various models of RM procedures and the resulting development of a more

appropriate procedure to answer the problematic, and finally the detailed stages of

the developed RM procedure. The purpose of the literature review is to develop a

hypothesis by highlighting on which aspects of RM, THRM may have an impact.

Scholars highlight the evolution of the revenue manager function as well as its day-

to-day duties and responsibilities (Cross et al., 2009; Kimes, 2011). From the stages

of RM processes and techniques to the elements of the RM systemic framework, the

studies provide a comprehensive understanding in the area. Concurrent research

supports the present research in acknowledging the elements of various RM

procedures, stages of procedure, and relevant inseparable elements of the

framework that are possibly affected by the adoption of THRM (Cross et al., 2009;

Noone et al., 2011; Appendix 1).

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2.2 The Development of Hotel Revenue Management

2.2.1 Understand Revenue Management

Yield management is the umbrella term for a set of strategies that enable capacity-

constrained service industries to realise optimum revenue from operations

(RevenueByDesign, 2012). At its beginning in the lodging industry, yield

management was seen as the application of Information Technology (IT) systems

and strategies concerning approaches to charge for a service in order to allocate the

right service offer to the right guest at the right price and at the right time (Kimes,

1989; Kimes and Wirtz, 2003). This places RM application within the area of

marketing management in which it significantly contributes to demand generation

and guest behaviour management (Cross et al., 2009; Anderson and Xie, 2010).

Academic studies in yield management have not only received special attention from

marketing research, but also from pricing and operations research (Talluri and Van

Ryzin, 2005; Shy, 2008). After having developed by the airlines, yield management

has extended to its present state as a common business discipline in an array of

industries. This discipline can strongly contribute to businesses that present the

following common features: markets divided into micro segments, perishable product

or service, volatile demand, availability of advanced bookings, limited capacity, and a

low ratio of variable to fixed cost (Kimes, 1989; Wirtz et al., 2003). However, it is

seen that these features do not represent an essential requirement to successfully

implement yield management in a business (Schwartz, 1998).

2.2.2 Operate Revenue Management

RM begins with the estimation or forecast of demand coming together with a range

of automated systems which endorse the function of controlling rates (Kimes, 1989).

The efficiency of those systems needs tactical and strategic schemes for co-workers

to put into effect their recommendations, including a feedback stage which enable

the team to evaluate the effect of their choices (Kimes, 1989). Kimes (1989)

summarises that any sector possessing constant capacity of perishable products and

dealing with unconstrained demand where a part of customers purchase ahead

(Bookings) is compliant to RM techniques. Earlier concerns within the discipline were

prefaced by the warning that the tactical market driven pricing method of RM may

slowly undermine profit margins (Dunn and Brooks, 1990). Hotels were consequently

8

warned to keep a strategic outlook on profitability per segment level (Dunn and

Brooks, 1990). However, with the evolving role of the discipline and with the

perspectives of integrated all revenue centres into the RM system and by

complicating the value of market segments this could be negated (Noone et al.,

2011). Parallel scholars draw around the discussion of a rational approach to pricing,

deviating from guests bargaining for lower prices to one in which prices are

connected to segments and are fenced through assigned restrictions to keep specific

segments out of certain rates (Hanks et al., 1992). In the light of this, fences can be

physical bedrooms features or non-physical limitations connected to the booking

time (Advance purchase terms) or length of stay as hotels endeavour to distinguish

business customers from leisure customers (Hanks et al., 1992).

2.2.3 Adopt Hotel Revenue Management

Differently to airlines which refined their RM approach throughout the years, the hotel

adoption of RM happened with less internal development. Hotels consequently

encountered specific misunderstandings regarding RM usages (Lieberman, 1993).

One of the primary misconceptions on the discipline is that it was a computerised

system which was meant to redefine a hotel while the reality is that RM corresponds

to an array of tools and systems to support teams for a greater management of their

business (Lieberman, 1993). In parallel, Lieberman (1993) was supported in

cautioning hotels concerning the usage of RM. In this regard, Kimes (1994) pled that

airline passengers were familiar with inconstant pricing whereas hotel RM was in its

early stages. A survey of hotel consumers indicated guest’s perception of pricing

measures as appropriate if the guests were told in advance of their extra features

and if acceptable restrictions were bounded to reduced prices (Kimes, 1994).

Additionally, the respondents perceived offers lacking advantages in return for

restrictions and not advising buyers of their extra features as unreasonable practices

(Kimes, 1994).

Although the adoption of reasonable and realistic approaches to inconstant pricing

was widely discussed by academics, the effects on a hotel from controlling prices for

variable lengths of stay was identified (Weatherford, 1995). Moreover, it is seen that

properties can achieve up to 3 percent by managing stay duration of guests.

Weatherford (1995) draws around a linear programming method which sets

availability controls for various stay duration similarly to airlines which apply to

control seats in regard of the differing itineraries that passengers may need. In the

9

light of this, managing stay duration for guests is comparable to managing airline

passengers’ different itineraries (Weatherford, 1995).

A path is recognised on the adoption of RM principles for all hotel operations to

proceed along in which managers are required to categorise and document the

problems their hotel should address to optimise its profit (Cross, 1997). These

problems incorporate the requirements of the market and the firms which are

encouraged to outline how outcomes from RM will be quantified (Cross, 1997). The

academic discussion then argues for the technological aspect of RM constituting of

the adoption of technology for the development of forecasts and maximisation of

prices (Cross, 1997). Eventually, the human edge of RM is asserted as a result of

the adoption of teams and product winners to make certain appropriate execution

and assessment of the yielding strategies (Cross, 1997). Due to the fact that RM

systems appear to control prices across differing guest-stay durations with an aim of

accepting the best bookings and optimising demand, they are restricted by the

information they obtain (Anderson and Xie, 2010).

The concept of demand inference from sales information is discussed for the

application of denials information, written account when a potential customer makes

a booking inquiry without confirmation (Orkin, 1998). Although it is indicated that

there is the possibility for a demand overestimation by applying this approach,

estimating real demand is a crucial step in the RM application (Orkin, 1998). Other

demand estimation problems can be identified as they concentrate on the degree of

forecasting detail (Weatherford et al, 2001). Evidence is made on the information

that the more granular a forecast is, the more exact its calculations will be, specifying

that organisations should endeavour to work with information which are as separated

as possible (Weatherford et al, 2001). For instance, one may forecast each category

of rates and stay duration combination apart from others, instead of producing an

occupancy forecast and output information for differing categories of rate

(Weatherford et al, 2001). The manner in which the forecast data is received by the

revenue manager is therefore as noteworthy as the precision of the forecast itself

(Schwartz and Cohen, 2004).

2.2.4 Adopt Total Hotel Revenue Management

In the ongoing era of the lodging industry, RM is commonly described as the most

significant field, comprising of business practices and processes of operations

10

(Helsel et al., 2006). It is such an integral element of a hotel that in many cases, it

imposes practices, business processes, data communication and tasks that support

the maximisation of hotel revenues. The perception has changed as current hotel

managers share the opinion that considering the RM function more strategically and

taking into account all sources of revenues will be beneficial (Helsel et al., 2006). A

survey research that evaluates opinions of revenue specialists about the future of

hotel RM highlights the shift from a tactical market driven pricing and inventory RM

approach to a more strategic and holistic RM approach that encompasses all

revenue streams and embrace technology to achieve it (Kimes, 2011). From an

emphasis on pricing and inventory management to a comprehensive function that

integrates all departments, revenue managers are no longer in charge of optimising

profit only but become strategists offering analytical insights (Cross et al., 2009)

Dynamic pricing, THRM, guest-centric RM and the implementation of new

approaches, strategies, and tools, are therefore recent responsibilities for which

revenue managers are accountable (Kimes, 2011; Noone et al., 2011).

The practice of THRM involves the measurement of total guest’s expenditures and

revenue per market segment, enabling hotels to discover and optimise profitability

across the whole property (Noone et al., 2011). This means maximising revenues

from all revenue centres, and involves food and beverage outlets, function spaces,

spa services, leisure facilities and other revenue streams (Noone et al., 2011). New

performance metrics are consequently being used and tracked and internal metrics

such as Gross Operating Profit Per Available Room (GOPPAR) and Total Revenue

Per Available Room (TrevPAR) appear as the most preferred indicators to measure

total profitability (Hoogenboom, 2012). Adopting THRM seems to be relatively

complicated and laborious as tracking total guests’ expenditures generate the

introduction of additional performance measurements such as Revenue Per

Available Square Meter (RevPASqm) or Revenue Per Available Meeting Room

(RevPAMR) (Orkin, 2003). These measurements can be incorporated into

operations as performance targets, on the balance sheet and during meetings with

all hotels’ stakeholders (Lieberman, 2003; Hoogenboom, 2012).

2.3 The Revenue Management Process in its Systemic Framework

2.3.1 Introduction to the Revenue Management Systemic Framework

The RM process and its environment constituting synergistic components can be

conceptualised within a systemic framework, depicted in Diagram 1.

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Diagram 1: Revenue Management Systemic Framework.

Source: Adapted from Emeksiz et al. (2006) and RevenueByDesign (2012)

Once a future guest requests a reservation, this is recorded by properties’ revenue

IT systems (RevenueByDesign, 2012). The structural components of the Revenue

Management Systemic Framework (RMSF) (Diagram 1) comprise of revenue IT

systems, revenue practices, revenue centres as well as knowledge and data. The

operational outcomes of the RM procedure represent the particular components of

the specific reservation enquiry such as the room inventory available (Amount and

classification), rates, length of stay, cancelling or amending the booking conditions,

and the status of reservation which can be held or declined (Forgacs, 2013). The

details of the reservation and how the entire RMSF (Diagram 1) functions have an

effect on the perception of fairness of potential guests, their loyalty and their

Reservation enquiry

Reservation components

Perception

of fairness

and

intentions of

customers

Revenue Management Framework

Knowledge

and Data

Hotel reservations components

Revenue

Centres


Revenue

Practices


Revenue

IT

Systems


Revenue

Management

Procedure


Revenue

Team


12

intentions to make reservations with the identical property or hotel group for their

next stays (Choi and Mattila, 2012).

The RMSF (Diagram 1) is subjected to the continuous effects of extramural

microeconomic and macroeconomic elements as well as intramural elements during

which period the property is operated (Vinod, 2004). These can be represented by

financial circumstances, the enterprise’s objectives, a set of laws, destination

perceptions, competitors, or demand fluctuation, and operators in RM require taking

those into account in their decision-making process (Vinod, 2004). The various

components of the RMSF (Diagram 1) have been researched by academics and

provide a comprehensive understanding of the overall landscape (Refer to appendix

1). In the light of this, those provide a better visibility of the synergistic and

inseparable elements of the RM process that may support the research in

discovering potential impacts from the adoption of THRM. Although academics

conceptualised synergistic links between components of the RM framework and the

RM process, it might represent a limitation as some synergistic elements of the

model could directly be integrated within the RM process in order to facilitate the

answer to the problematic.

2.3.2 Revenue IT Systems

Suitable revenue IT systems are indispensable for taking through process a large

collection of information (Guadix et al., 2010). Properties that make use of those

revenue IT systems acquire a factor that lead them to success against those which

depend on intuition in their pricing or forecasting decision- making, for instance

(Emeksiz et al., 2006). Revenue managers are supported by revenue IT systems as

these provide computerised and calculated indications and insights on rate

adjustment, capacity and channel management, which play a part in determining the

most effective decisions (Guadix et al., 2010). Systems are involved in analysing

considerable amount of information and may provide accurate forecast, for instance.

In addition to this, it is demonstrated that the interface of IT systems affects

significantly the opinion of revenue managers as well as their disposition to proceed

along computerised forecasts (Schwartz and Cohen, 2004). Despite this, final

decisions depend on the revenue managers and their co-workers (Schwartz and

Cohen, 2004). THRM which may impact workforce could definitely affect revenue IT

systems which then could impact the various teams due to more varied amount of

13

reports concerning a greater amount of departments in hotels. However, the

literature demonstrates that the combination of employee interactions with revenue

IT systems have not been researched by academics. While THRM seems to become

an emerging concept in the hospitality industry, this could affect considerably the

way revenue IT systems operate as well as the reports they produce, and the

insights and suggestions they provide.

2.3.3 Knowledge and Data

A large collection of data concerning market performance metrics, namely:

occupancy rate, Revenue Per Available Room (RevPAR), Average Room Rate

(ARR), Market Penetration Index (MPI), Average Rate Index (ARI) and Revenue

Generation Index (RGI) are indispensable for putting into practice RM

(Hoogenboom, 2012). In addition to this, the RMSF (Diagram 1) requires accurate

data about its property’s future reservations for each day, pricing and strategies of

the competitive set, events in the destination, data concerning law amendments,

commercial transactions of ancillary services from additional revenue centres, and

additional information which concern supply, demand, and end-of-the-month results

(Barth, 2002; Hogenboom, 2012). Although the market performance metrics and

information requirements are of paramount importance in the RM function, they did

not receive enough attention from scholars. Review of related literature

demonstrates that even if the metrics are present in academic research, few

scholars analyse them in details.

However, practitioners seem to have considered metrics for THRM such as Revenue

Per Available Based Inventory Unit (RevPATI), Revenue Per Seat Hour (RevPASH),

Revenue Per Available Square Meter (RevPASqM) and Revenue Per Available

Treatment Hour (RevPATH) (Orkin, 2003; Kimes, 2005; Kimes and Singh, 2009).

Orkin (2006, p. 158) declared: “A future vision for revenue management speaks of a

day when each guest is a market segment of one and the availability of rates for a

requested stay would depend on a guest’s past history or forecasted future with the

hotel”. This could lead to the adoption of guest-centric RM metrics such as Revenue

Per Available Guests (RevPAG), for instance (Orkin, 2006). RM metrics are crucial in

the development of RM strategies and in the decision-making process of revenue

managers; as the discipline seems to evolve with the adoption of THRM, those

metrics may change similarly to serve new purposes.

14

2.3.4 Revenue Practices

The revenue practices which are described as tools by which hotels are able to

optimise their revenue streams represent an essential element of the RMSF

(Diagram 1). The revenue tools can be classified as miscellaneous and rate

management practices (Refer to appendix 2). Miscellaneous practices do not have

direct effects on rate management and concern the management of inventory and

channels relating to availability, overbooking, managing capacity, stay and duration.

Rate management instruments involve dynamic and behaviour-based pricing, rate

discrimination and fences, guarantees of lowest rates and additional methods that

directly affect properties’ rates. However, miscellaneous and rate management

practices seem interconnected and used concurrently; rates change not simply by

demand period or room category, but also by distribution channels (Choi and Kimes,

2002; Hung et al., 2010). The classification of revenue practices may support the

research in identifying which ones have been impacted by the adoption of THRM.

Rate Management Practices

Academics have recognised the significance of rate management and rate change in

the light of supply and demand, as a foundation of long-term competitive edge

(Lovelock, 2001; Cross et al., 2009). Rate discrimination represents the core of rate

management practices (Kimes and Wirtz, 2003, Shy, 2008). At the origin, rate

discrimination signifies that a potential guest is charged with various rates for the

identical room and the reasons for this are the variations in rate sensitiveness of a

property’s market segments (Tranter et al., 2008). Corporate guests are not highly

sensitive with rates in comparison to leisure guests as they are often able to pay

superior rates (Hanks et al., 2002). Nevertheless, moving from high to low priced

services can happen rapidly and in order to stay away from this, hotels can apply

rate fences (Zhang and Bell, 2010). Rate fences are terms under which particular

services are available on the market (Zhang and Bell, 2010). Those incorporate

length of stay, guest features (e.g.: VIP, celebrity or governmental), period of the

week, of the month, and of the year, cancellations, as well as conditions of

transaction and its corrections (Kimes, 2009). From a practical perspective, price

fences belong to the reservation terms and in order to stay away from any

complaints from bookers, these terms need to be unambiguous when the reservation

is made (Kimes, 2009). THRM could potentially impact rate management practices

15

as this would involve the price of all ancillary services, increasing the intricacy of the

commercial transaction between a hotel and its customer.

Dynamic pricing represents currently one of the most important parts of pricing

(Palmer and al., 2008). Dynamic pricing enables hotels to optimise their revenue by

offering a rate which reveals the present degree of occupancy and demand and

correct it depending on whether there is an alteration in occupancy rate or demand

(Tranter et al., 2008). In the light of this, bookers often settle payments with different

rates having identical reservation features such as the length of stay and the room

category (Tranter et al., 2008). This depends on one main factor: the time of

booking. That is one of the reasons that make bookers criticise dynamic pricing

(Palmer and McMahon-Beattie, 2008). From a financial perspective, dynamic pricing

can however be extremely profitable but it requires to be used cautiously and along

with detailed information regarding the terms of reservation (Palmer and McMahon-

Beattie, 2008). The potential implications of THRM in dynamic pricing could make it

more complex as it would add several more details in the reservation due to the fact

that dynamic pricing might be applied in all revenue centres of the hotel.

Guarantees of lowest rates are often offered by hotels to their clientele and those

consist of matching a lower rate that a booker could come across with (Demirciftci et

al., 2010). This practice is identified as using the rate management model and it

does not represent practical value in the eyes of the clientele as the guarantees are

only offered for one day after the reservation time (Carvell and Quan, 2008).

Academics agree on the fact that guarantees should be offered within the full

duration of time between the date of reservation and the date of arrival and not

simply a day after the reservation (Carvell and Quan, 2008; Demirciftci et al., 2010).

Moreover, it is disproved that claims for guarantees of lowest rates are respected by

many hotel groups (Demirciftci et al., 2010). This could affect significantly the image

of a property and the perception of fairness in the eyes of potential guests. THRM

could consequently affect those guarantees as they could be applied to ancillary

services in various ways.

It should be noted that miscellaneous and rate management practices are often

commonly examined together in the academic literature. This is the consequence of

the concept that RM in the hospitality industry is an integrated framework which

needs to yield answers to revenue issues for rate levels and fences, reservation

terms and overbooking practices concurrently with the best possible allotment of

16

rates to a range of rooms and additional services (Harewood, 2006; Guadix et al.,

2010; El Gayar et al., 2011). Moreover, the best possible quantity of overbookings is

usually affected by the price of the room which demonstrates that miscellaneous and

rate management practices are intertwined (Ivanov, 2006). Ultimately, properties

attempt to reach rate parity amongst the various channels of distribution and this

needs concurrent usage of miscellaneous and rate management practices such as

rate discrimination or an appropriate management of channels (Demirciftci et al.,

2010). It would seem appropriate to investigate if those practices could be applied to

other revenue centres with the adoption of THRM.

Miscellaneous practices

Managing hotel capacity, overbookings and stay duration restraints are integral parts

of the management of hotel inventories (Karaesmen and Van Ryzin, 2004). The

most significant technical skills are managing capacity and controlling overbookings,

which represent simultaneously the two most problematical examined in RM

(Karaesmen and Van Ryzin, 2004). The management of capacity comprises the

range of activities that are devoted to control a property’s capacity (Pullman and

Rogers, 2010). The related decisions can be separated into strategic (long term) and

tactical (short term) decision-making, having long term and short term time

orientations (Pullman and Rogers, 2010). Strategic decisions involve the quantity of

rooms available, the occupancy rate, and the adaptability of the hotel in terms of

inventory allotment (Pullman and Rogers, 2010). Tactical decisions focus on daily

capacity management and gather a range of actions that involve the creation of

calendars and work schedules or check-in and check-out times (Pullman and

Rogers, 2010).

Originally, capacity concerns the room capacity only such as the total amount of

nights a property can deliver at a specific time (Pullman and Rogers, 2010). Capacity

can be reduced by shutting floors and increased by offering rooms for the day, for

instance (Pullman and Rogers, 2010). In the light of this, capacity may involve food

and beverage outlets, spa treatments, and other ancillary services on which THRM

may impact and influence the way capacity is managed.

Academics have widely researched overbooking as a RM practice or tool (Refer to

appendix 4). The significant attention that received overbooking by scholars could be

due to the fact that this practice has been considerably criticised in terms of policies,

ethics and legislations which will be briefly developed further in this research.

Overbooking is funded on the presumption that some guests who reserved rooms

17

will not arrive at the hotel or cancel their reservation just at the last moment before

the check-in time (Ivanov, 2006). This is the reason which explains that hotels

protect themselves from those by determining an amount of overbooking that will

equal the amount of cancellations or no shows (Ivanov, 2006). This level of

overbooking can be calculated by RM methods and can be handled by establishing a

coordination policy between one property and one of its competitors (Netessine and

Shumsky, 2002). However, the optimal quantity of overbooked rooms can be

different from reality and if fewer guests arrive, the property would go through losses

while if more guests arrive, some of them would be walked away and transferred to

other hotels (Ivanov, 2006). In the light of this, it is important to develop and follow

appropriate processes to walk guests out of an overbooked property (Ivanov, 2006).

Not all hotel guests come at the same time and the hotel may therefore

unintentionally refuse a room to someone who does not accept to be walked,

considering that a property is not able to receive the reverse sale that we usually

witness at departure gates (Anderson and Xie, 2010). Customary RM has been

demonstrated to generate revenue of more than 4 percent by applying overbooking

as a way to control no shows and cancellations (Weatherford, 1995). In hotels, the

intricacy of overbooking was discussed in the early stage of the RM literature in

which the specific difficulty of a several nights stay was highlighted (Lefever, 1988).

Besides, a hotel simulation model was developed which investigated the intricacies

connected to overbooking (Lambert et al, 1989). It is cautioned that revenue

managers overbook as a purpose of the planned arrivals, but they additionally

should take into account unanticipated stay overs and early departures to reduce

their amount of vacant rooms or walked guests (Toh and Dekay, 2002). It would

seem appropriate to investigate if overbooking as a revenue practice could be

applied to other revenue centres with the adoption of THRM, for instance.

The control of stay duration enables properties to define restrictions on the amount

of nights in reservations (Vinod, 2004). Academics did not pay much attention to the

area of length of stay restrictions but the few research available provide a clear

understanding of this RM practice. They can consequently protect themselves from

losses when guests make a reservation during high demand periods (Vinod, 2004).

The control of stay duration also enables to increase revenues from nights during

low demand periods (e.g.: 2 nights minimum to make a booking) (Vinod, 2004).

Nevertheless, the control of stay duration has the principal inconvenience of not

18

being flexible (Vinod, 2004). In this regard, the adoption of THRM could affect the

flexibility of this practice, in a positive or negative way.

As a miscellaneous practice, the management of channels has not been particularly

researched by scholars as compared with its significant role in RM practice. Even if

the framework of intermediaries employed by hotels as well as the contracts’ terms

affects considerably the RM metrics, merely a few academics explored channel

management from a RM viewpoint. Distribution channels are identified as a cause of

erosion between a hotel and its guests as third party websites tend to monopolise

most reduced offers, shading away the ones offered by hotels (Cross et al., 2009).

Moreover, academics investigated the influence of internet wholesalers on

distribution channels and concluded that despite the conflicts that may occur, hotels

were usually satisfied of their beneficial relationships (Myung et al., 2009).

Nevertheless, research conclude that the application of revenue strategies to

distribution channels could not be as useful as expected in hotels’ endeavour to

optimise their revenues by price and stay duration (Choi and Kimes, 2002). This

could justify the lower concern in distribution channels as a RM practice in

comparison to the extensive research on overbookings. The adoption of THRM could

significantly affect the way revenue managers use channel management in their

distribution actions and strategies.

2.3.5 Revenue Centres

Revenue centres represent the possible hotel revenue streams from rooms, food

and beverage outlets, function and meeting spaces, spa treatments and services,

gym facilities and services (e.g.: classes or coaching sessions), golf courses, casino

services and other ancillary services (e.g.: transports, cooking workshops, private

spaces in nightclubs and karaoke rooms) and the ability of hotels to actively apply

rate management as an instrument in order to generate incremental revenues

(Kimes, 2011; Noone et al., 2011). This ability to encompass and optimise all

revenue streams of a hotel is commonly called THRM (Noone et al., 2011).

Academics have mainly investigated RM in the hospitality industry but there is

however a significant lack of research in revenue centres other than the rooms

division and its concerns and there are not any entire research dedicated to THRM

alone. The truth behind the fact that hotels can possess revenue centres other than

the rooms division might make the RM procedure much more complex, and the

adoption of a THRM framework within a property could potentially affect the

19

elements of the RMSF (Diagram 1). Rather than simply optimising room revenues,

RM operators have to focus on all revenue streams of their entire property (Noone et

al., 2011). This legitimises the occurring concern in putting to use hospitality RM

principles and practices to additional sources of revenues (Refer to appendix 1).

The maximisation of ancillary services will often provide incremental revenues if the

clientele is already staying in the property, even if some other customers might

purchase only ancillary services without being accommodated (Kimes, 2005; Kimes

and Singh, 2009). In the light of this, the objective of optimising room revenues might

not comply with the objective of THRM and revenue managers could consider

decreasing prices charged for a category of room for the purpose of attracting

supplemental guests which then may generate more demand for other sources of

revenues (Forgacs, 2013). In use, most hotel groups have granted credentials to the

significant advantage of considering ancillary services as additional revenue centres

and have implemented appropriate THRM strategies to maximise revenues from

them (Forgacs, 2013). Nevertheless, scholars have only paid attention to revenue

centres as separate elements and not as a whole with THRM principles. In the light

of this, it might be indispensable in the future that research in RM includes other

revenue centres into the revenue optimisation challenge resulting from THRM.

2.3.6 Revenue Team

Planning and implementing the RMSF (Diagram 1) require necessary human

resources implications (Tranter et al., 2008; Selmi and Dornier; Beck et al., 2011).

Academics have a shared opinion on the fact that revenue teams and other

concerned departments are essential for successfully operating the RMSF (Diagram

1) (Tranter et al., 2008). The particular competencies and training that revenue

managers require is of paramount importance in their function in order to make

informed and effective decisions (Lieberman, 2003). These also encompass the

ability to promote a RM culture throughout the property that is operated (Lieberman,

2003). The business skills that a revenue manager needs start from digital marketing

to financial knowledge, amongst others (Kimes, 2010). How THRM potentially

impacts those skills and requirements could bring into light alterations in the RM

function.

Establish and implement the RMSF (Diagram 1) within a property is a demanding

task and an important alteration for the hotel environment that might prompt a heavy

20

resistance amongst workers and what is at stake should be given attention and

handled appropriately (Lockyer, 2007). The responsibility of applying RM methods

belongs to the sales and marketing manager for a large amount of small businesses

(Mainez, 2004). However, most hotel groups have granted credentials to the

significance of RM and have designated a detached revenue manager, revenue

teams or even created a revenue management department to lead hotels towards

successful optimisation of their revenues (Mainzer, 2004; Tranter et al., 2008). In the

light of this, THRM could potentially influence the way RM teams are structured as it

involves more responsibility.

2.3.7 Guest-centric Revenue Management

While focusing on pricing and inventory management instruments, the discipline of

yield management is intimately linked to CRM (Noone et al., 2003). The combination

between the two business disciplines has received a lot of attention from scholars

and both can have separate goals and timescales (Milla and Shoemaker, 2008).

CRM is described as more strategic (Long term decisions) than RM which is initially

tactical (Short term actions) (Milla and Shoemaker, 2008). However, both functions

are seen as synergistic and should altogether result in combined business decisions

based on intertwined strategies (Noone et al., 2003). Revenue instruments such as

dynamic pricing, capacity management, and promotions can support customer

relationship management in developing beneficial connections between a hotel and

its guests (Noone et al., 2003). Noone et al. (2011) emphasise on the evolution from

a tactical RM to a more guest-centric approach which initiates guest-centric RM.

THRM is identified as having a synergistic link with guest-centric RM where

interactions with guests and guest-centric RM strategies might be changed in the

light of the optimisation of ancillary services (Noone et al., 2011). The investigation of

the aforementioned link would seem appropriate in order to answer to the

problematic of the study, as guest-centric RM, THRM and the RM process are

identified as synergistic and hardly separable in academic research (Noone et al.,

2011).

2.3.8 Ethics in Revenue Management

Originally, airline RM was centralised while most hotels were decentralised and

functioning in hotels that habitually controlled RM systems (Anderson and Xie,

2010). It is now less the case as most international hotel groups embrace a hybrid

21

approach with centralised RM as a support to decentralised RM on property level

(Kimes, 2011). Each hotel usage of RM is consequently rather customised and hotel

managers are worried about losing their proprietary data to competitors (Anderson

and Xie, 2010). However, precautious organisations can endeavour to protect their

systems as confidential business (Wagner, 2001). Group and agreed rates represent

an aspect of hotel RM which may require careful secrecy as numerous city

properties have more that 50 percent of their bookings placed in advance by wide

groups at reduced prices for meeting, conferences and events (Anderson and Xie,

2010). The angle of RM which concerns ethics starts with the origin of competitive

edge, technical knowledge and its handling as a confidential intramural information

(Kimes and Wagner, 2001). The way those elements are incorporated is judged as

trademarked knowledge and remains a trade secret (Kimes and Wagner, 2001). In

this regard, academics emphasise on the watchfulness required amongst executive

and management teams because the industry meets considerable turnover rates

and this might result in leaked confidential knowledge to competitors (Kimes and

Wagner, 2001). The fact that THRM extends the audience in RM within a property

could result in higher risks of revealing trade secrets to the competitive set.

Although RM practices are seen as having positive effects on a hotel’s revenue, they

have been widely criticised in relation to complaints and the absence of sensible

benefits (Koide and Ishii, 2005). This criticism concerns directly rate discrimination

and overbookings (Bitran and Caldentey, 2003). Most guests do not consider that

some RM practices are right such as having to pay higher rates for the identical

room or service or having to move to another property due to overbooking practices

(Bitran and Caldentey, 2003). This could result in insufficient reservation details such

as cancellation conditions (Koide and Ishii, 2005). Academics have paid attention

mainly to the perception of fairness in RM from the perspective of guests and a

classification of practices that are considered tolerable or offensive can be

developed on this basis (Refer to appendix 3). Guests tend to tolerate RM practices

if the conditions of reservation are available and understandable or when the

services charged with various rates are seen different (Hwang and Wen, 2009).

However, when price reductions are not important in comparison with cancellation

conditions, guests can be disappointed (Hwang and Wen, 2009). Moreover, it is

stated that simply notifying the guests about prices is insufficient to develop their

perception of fairness and it would be appropriate to provide them with the reasons

for prices irregularity and conditions of reservation (Choi and Mattila, 2005). THRM

could impact this perception of fairness by compensating the disadvantages of some

22

less ethical practices by offering compensations with ancillary services, for instance.

In this regard, this would be in phase with a guest-centric RM approach as

developed in the previous section.

2.4 The Revenue Management Process

The acknowledgement of several stages of the RM procedure has been widely

differentiated in various manners through numerous practitioner on-hands manuals

(IDeaS, 2004; ALHA, 2006; RevenuePerDesign, 2012; HOSPA, 2013; Landman,

2015) and academic research (Emeksiz et al. 2006; Tranter et al. 2008; Noone et al.,

2011; Hayes et al. 2011). The procedure of the function is significantly shifting from a

tactical market driven pricing technique to a more strategic and holistic discipline. A

development that require undertaking a holistic posture in the practice of the function

and consequently procedure (Kimes 2010). The purpose of the following literature on

the various RM processes is to critically review and compare the most relevant

models from both academics and practitioners. In the light of this, it is then sought to

develop a universal model which might facilitate the investigation of the adoption of

THRM and its related impacts. The development of a more comprehensive model by

merging different approaches of processes seems more appropriate than driving the

overall research of this paper around one original RM procedure alone. The most

significant outcome of this section is to build a comprehensive knowledge on where

and how the RM process could be impacted by the adoption of THRM, from a

literature point of view. The reasons on the choice of the process on which the study

and theory is based will also be justified.

23

2.4.1 Process A

Diagram 2: Process A

Source: Adapted from RevenuePerDesign (2012)

The diagram illustrates a more or less comprehensive model of the RM process with

subsequent stages, namely: data analysis, forecasting, capacity management,

operational pricing, distribution (Channel and inventory management), and the

evaluation of strategies (RevenuePerDesign, 2012). This RM process has the

advantage of highlighting the synergistic relation between RM culture, RM strategy

and RM resources as a mirror of the inseparable elements of the RMSF (Diagram 1)

with the RM process (Emeksiz et al., 2006; RevenuePerDesign, 2012). Despite this,

this RM process negates the importance of other inseparable elements of the RMSF

such as revenue IT systems, interactions with guests and the implication of other

revenue centres. Moreover, it could be interesting to add the RM pre-requisites,

monitoring, and implementation activities in this model (Hospa, 2013). Another

weakness of this model is that it doesn’t involve any pricing activity before the

second stage of forecasting. In this regard, one of the first critical stages of the RM

process is to establish a first basis for prices (Hayes and Miller, 2011). The

establishment of rates and strategic pricing are of paramount importance because it

communicates to potential guests the value assigned on offerings by the hotel and

this is a critical aspect of RM (Hayes and Miller, 2011).

1

4

3

1

4

3

2

1

4

3

1

4

3

3

1

4

3

1

4

3

4

3

1

4

3

1

4

3

5

4

3

1

4

3

1

4

3

6

4

3

1

4

3

24

2.4.2 Process B

Diagram 3: Process B

Source: Adapted from Hospa (2013)

The above diagram depicts a model of the RM process which puts it into perspective

with the presence of the market factor, economic conditions, other conditions and

constraints related to the process functioning (Hospa, 2013). The constraints of hard

and soft supply as well as cost base constraints are reminded (Hospa, 2013). In

addition to this, the basic RM conditions of perishability, high fixed costs and low

variable costs are included (Hospa, 2013). The critical advantage of this model in

comparison with Process A (Diagram 2) is its dynamic aspect involving concurrent

pricing and segmentation activities before forecasting demand and maximising

revenue (Hospa, 2013). This model also provides the critical part of developing

prerequisites such as the analysis of the competitive set, the analysis of Strengths,

Weaknesses, Opportunities and Threats (SWOT) and the development of a price

value matrix (Hospa, 2013). Despite the quality of this process which endorses more

the role of indicator of process, there is a lack of synergistic and inseparable

elements of the RMSF (Diagram 1) such as human resources concerns or the

implication of revenue IT systems, for instance. However, this model provides

relevant insights for the development of an appropriate model of the RM process

which will support the present research in answering the problematic; it also lacks a

few stages such as inventory, capacity, and distribution management as well as the

implementation of strategies and the evaluation of results followed by strategic

adjustments (Emeksiz et al., 2006). Finally, even if this model provides a strategic

overview of the RM process by including the market factor, economic conditions and

other RM conditions and constraints, it lacks some strategic stages in the process.

Prerequisites Development

(Compset, SWOT, Price Value

Matrix)

Segmentation Forecasting

Demand

Pricing

Segmentation

Economic

Conditions The Market

Yield Conditions Constraints

25

2.4.3 Process C

Diagram 4: Process C

Source: Adapted from Noone et al. (2011)

The above diagram illustrates a comprehensive although very tactical model of core

RM processes which is compensated by the presence of connected strategic

implications such as guest interaction, THRM and other strategies (Noone et al.,

2011). This is the only model and academic research which includes THRM and

highlight particular features of THRM that may impact on tactical stages of the RM

process such as the maximisation of ancillary services, packaging, and lastly the

coordination amongst departments which refers to the human resources

implications, representing an inseparable element of the RM framework to the RM

process (Emeksiz et al., 2006; RevenuePerDesign, 2012). Although it includes

1

2

3

1

4

3

1

5

4

3

1

1

26

strategic implications such as THRM, guest interaction and other strategies, the RM

process represent very tactical core RM processes that can be interpreted as stages

(Noone et al., 2011). Those are highly tactical as it involves demand modelling,

demand forecasting, optimisation, setting booking controls, and distribution of

channel management but excludes more strategic stages such as the

implementation, monitoring and evaluation of results for strategic adjustment (Noone

et al., 2011). In the light of this, this can be seen as a weakness as RM has been

proven shifting from a tactical market driven pricing approach to a more strategic one

concurrently with the emergence of THRM (Kimes, 2011). However, the advantage

of this model is that it blends some interesting strategic aspects with tactical stages

of the RM process. In addition to this, this model is another proof that some aspects

of the RMSF (Guest implications and strategies) are inseparable to the RM process

in the investigation of the impacts of THRM as those three are interconnected

(Noone et al., 2011). This provides more indications on where THRM may impact the

RM process as well as some other relevant elements of its framework and might

support the development of the most appropriate RM process and the research

instruments in order to answer to the research problematic more accurately. Finally,

this model legitimises the problematic of this study as it indicates and supports the

developed theory based on the literature in assuming that THRM affects the RM

process and synergistic elements of its framework.

27

2.4.4 Process D

Diagram 5: Process D

Source: Adapted from Emeksiz et al. (2006)

The above diagram depicts a model of the RM process with subsequent stages,

namely: planning involving the articulation of RM strategies, analysing supply and

demand including inventory management and pricing, implement strategies

comprising forecasting, assessment of results and RM activities, and finally

monitoring and adjustment of RM activities and strategies (Emeksiz et al., 2006).

This model constitutes a comprehensive approach of the RM procedure and has

also the advantage to integrate both tactical and strategic aspects in each of the

stages. However, it can be identified as lacking dynamism in its approach as it states

activities that follow each other and are not repeated during the process. In this

regard, pricing adjustment is a practice that is repeated continuously during the RM

process and should start in the first step (Hayes and Miller, 2011). The planning

stage could be interpreted as a similar stage of the prerequisites development from

Process B (Diagram 3), but the development of those is only identified in the second

stage with the analysis of demand and supply (Emeksiz et al., 2006). The

development of prerequisites such as the competitive set analysis is a crucial

element to articulate basic RM strategies (Hospa, 2013). The strengths of this model

1 Planning: - Articulate RM strategies and committee - Use database - Prepare co-workers - Support and approval by the management

2 Analysing Demand and Supply: - SWOT analysis - Compset analysis - Identification of demand sources and booking characteristics - Market segmentation and identification of targets - Inventory allocations - Determination of conditions and rate management

3 Implementing Strategies: - Forecast demand levels of segments - Monitor demand and external factors - Adjust inventory and rates - Manage day to day RM operations

4 Assessment of RM activities: - Revenue and occupancy behaviour evaluation - Qualitative and quantitative assessment of RM results - Communication of RM results to all teams - Support and motivate co-workers in their participation

5 Monitoring and Revision

of RM activities

and strategies

28

seem to be the crucial third and fifth stages, namely: implement strategies involving

the adjustment of tactical activities such as adjusting inventory and rates, and the

monitoring of RM strategies and activities which emphasises on the fact that those

are continuous and require being monitored continuously (Emeksiz et al., 2006). One

of the significant advantages of this model is that it also integrates some aspects of

the RMSF (Diagram 1) in the RM process that are identified inseparable (Emeksiz et

al., 2006). In this model, those inseparable elements are the revenue team, revenue

practices, and required knowledge and data.

2.4.5 Process E

The review and comparison of the academic literature on the various models of the

RM process developed by both scholars and practitioners exhibit that the RM

process can be identified, interpreted, and applied in different manners by

practitioners (IDeaS, 2004; ALHA, 2006; RevenuePerDesign, 2012; HOSPA, 2013;

Landman, 2015) and academic research (Emeksiz et al. 2006; Tranter et al. 2008;

Noone et al., 2011; Hayes et al. 2011). The critical review of four most relevant

models of the RM process allowed this research project to develop and construct a

specific and more comprehensive model which could support the research in

identifying where THRM impacts. Moreover, as the following model has been

developed on the basis of various perspectives, it seemed that it would be more

universal and comprehensive to be addressed to research subjects with various

perspectives (Revenue Managers).

29

Diagram 6: Total RM Process

Source: Adapted from RevenuePerDesign (2012); Hospa (2013); Emeksiz et al.,

(2006) and Noone et al. (2011)

The above diagram illustrates a potential model for the RM process with subsequent

steps, namely: prerequisites development, definition of objectives and data

collection/analysis, demand forecasting, decisions and solutions, implementations,

inventory and distribution management, results assessment and adjustment of

monitoring. One of the strengths of this model is that it recognises the importance of

the continuous monitoring step which affects continuously each of the steps. In

addition to this, this model integrates some synergistic and seen inseparable

elements (In the blue disk) of the RMSF (Diagram 1) that are implied in the RM

process (Emeksiz et al., 2006; Noone et al., 2011; RevenuePerDesign, 2012). Those

elements were extracted from the literature-based RMSF (Diagram 1) and confirmed

with the aspects of the aforementioned various RM processes (Emeksiz et al., 2006;

RevenuePerDesign, 2012). Pricing being considered as one of the most important

revenue practices is thus omnipresent through the progress of the process in

revenue practices, for instance (RevenuePerDesign, 2012). Total RM Process

(Diagram 6) is potentially the most appropriate model to identify how and where the

adoption of THRM affects the original RM process and some indivisible components

that are involved with it such as knowledge and data, revenue practices, metrics,

1/ Prerequisites Development

2/ Define Objectives, Data Collection and Analysis

3/ Forecast Demand

4/ Decide and

Provide Solutions 5/ Implement

6/ Manage

Inventory and

Distribution

7/ Results

Assessment,

Adjustment of

Monitoring

Knowledge and data

Guest

Interactions

Revenue IT

Systems Revenue

Practices

Revenue Teams

Metrics

30

revenue teams, guest implications, and revenue IT systems. Total RM Process

(Diagram 6) seems adequate to support the answer of the problematic as it merges

some crucial aspects of the RMSF (Diagram 1) with all critically reviewed RM

processes. These result in the integration of all key elements in a dynamic,

comprehensive and universal model. This consequently supports the developed

theory based on the literature review. The aforementioned process will also ease the

understanding and responses of research subjects in answering the problematic of

the present research. This model will consequently be used to explore the impacts of

THRM through primary data collection with quantitative and qualitative research

methods.

2.5 The Stages of the Developed Revenue Management Process

This section reviews the literature regarding the various stages of Total RM Process

(Diagram 6). This will provide a more in depth understanding and knowledge of the

subsequent stages that will be explored through quantitative and qualitative research

methods constituting surveys and semi-structured interviews.

2.5.1 Prerequisites, Market Segmentation and Pricing

The first stage of the RM process starts with the construction of RM prerequisites

such as the creation of a competitive set (Forgacs, 2013). A competitive set is

identified as a cluster of properties by which a hotel can compare itself to the

cluster’s aggregate performance (STR, 2015). Revenue managers often inherit the

existing competitive set and it is sought to revisit the reasons behind it and their

credibility on a yearly basis (Forgacs, 2013). A competitive set should reflect a set of

properties that are reasonable aligned with the hotel product offerings as they may

offer a different range of attributes but should have a core range of comparative

attributes (Forgacs, 2013). Moreover, the competitive set should include the

standard of the hotel and the broad price ranges within which the hotel operates

(Forgacs, 2013). Determining the competitive set is indeed of paramount importance

because it will support the hotel before the construction of a strategic plan by clearly

understanding the market in which it operates (Hospa, 2013). This crucial first stage

must be completed as it represents the basis on which the future strategies will be

developed (Hospa, 2013). In addition to this, a SWOT analysis could be helpful to

assess the strengths, weaknesses, opportunities and threats and identify the internal

and external factors that make the competitive edge of a property (Hospa, 2013).

31

Another fundamental part of the first stage in the RM process is to develop a

customer segmentation of the market in which the hotel operates (Hayes and Miller,

2011). Traditional customer segmentation divided guests into groups according to

their behaviour and the primary division was into transient and group which is

followed by the reason for travel such as leisure or corporate (Hayes and Miller,

2011). Product offerings (e.g.: rooms, meals, spa treatments) were developed to

meet each segment’s expectations thus pricing strategies established to reflect the

various expectations, levels of flexibility in travel and willingness to pay (Forgacs,

2013). Despite the rudimentary division of guests into the above segments, being

able to subdivide a market into more specific guest segments which share similar

features represent an effective manner of identifying unmet guest expectations

(Forgacs, 2013). Market segmentation is more efficient when a property tailors its

product offerings to market segments which represent the highest value in terms of

profitability and provide them with perceivable competitive advantages (Hayes and

Miller, 2011). This prioritisation might support hotels in developing marketing

campaigns and pricing strategies to obtain optimal value from both highest and

lowest profitable guests (Forgacs, 2013). A hotel can employ guest segmentation as

the main foundation for the allocation of resources to service improvement,

marketing, innovation and delivery programmes (Forgacs, 2013). This market

segmentation can be conceptualised as a continuous cycle, illustrated in Diagram 7.

Diagram 7: The Market Segmentation Cycle

Source: Adapted from Forgacs, (2013).

Finally, the last critical part of the first stage of the RM process is to establish a first

basis for prices (Hayes and Miller, 2011).Pricing constitutes consequently one of the

revenue practices that was integrated in the Total RM Process (Diagram 6). The

establishment of rates and strategic pricing are of paramount importance because it

communicates to potential guests the value assigned on offerings by the hotel and

Divide market by

guest expectations

Determine

revenue potential

Assess

performance and

adjust

Invest to develop

tailored offerings

Target segment

according to

supply

32

this is a crucial aspect of RM (Hayes and Miller, 2011). Some research would

demonstrate that pricing would follow forecasting but demand is a function of the

value of a service is wanted by potential guests at a specific rate (Hayes and Miller,

2011). It is consequently almost impossible to evaluate demand for an offer without

its rate (Hayes and Miller, 2011). Market segment pricing will thus allow a hotel to

have a basis and assess the future price perceptiveness and sensitiveness of its

guests per segment (IDeaS, 2005). The analysis of the impacts of the adoption of

THRM on this first stage may reveal some significant elements.

2.5.2 Define Objectives, Collect Information, and Analyse

The RM process involves the establishment of predetermined objectives with

particular long term, medium term and short term timescales (Noone et al., 2011).

These objectives comprise the values of market and property performance metrics

mentioned previously (ARR, RevPAR, etc…) (RevenueByDesign, 2012). The

revenue IT systems then collect the required information offered by property’s

marketing IT systems and is analysed in order to support revenue managers with

indications about the various tendencies in performance metrics for the upcoming

periods of time (Guadix et al., 2010). Those represent some of the synergistic

elements of the RMSF (Diagram 1) that were integrated in the Total RM Process

(Diagram 6). The following third step of the RM procedure requires analysing the

demand and supply in the location of the hotel (Emeksiz et al., 2006). This research

investigates how THRM affects these three first steps that are interconnected with

data implications in terms of objectives, performance metrics, specific data and

analysis pre-requirements and the analysis of demand and supply which is identified

as forecast.

2.5.3 Forecast

Forecasting demand and trends includes the use of various techniques for the

purpose of providing revenue managers with predictions regarding future progress of

supply, demand and performance metrics (Forgacs, 2013). Hotels should be capable

to excel in demand forecasting in order to successfully apply RM principles and be

rewarded by its financial outcomes (Tranter et al., 2008). There is consequently a

large amount of academic research to forecast methods in application and in study

(Refer to appendix 4). In this regard, scholars have mainly paid attention to two

principal subjects gathering demand forecast and performance metrics forecast. This

is probably due to the quantity, features and structure of forecasts and demand in

33

terms of performance metrics, cancellations and no shows, arrivals, and other

statistics of paramount importance to the RMSF (Diagram 1). Nevertheless,

decisions for optimising revenue are subjected to the effect of the decisions and

actions of the competitive set as well as the impact of external microeconomic and

macroeconomic factors (Yuksel, 2007). In the light of this, it is unexpected to

observe that a lack of research investigating problems that involve forecasting

actions of the competitors as well as the external microeconomic and

macroeconomic factors that may influence a property. The adoption of THRM may

consequently affects the aforementioned implications of forecasts as it may involve

forecasts for other revenue sources than rooms.

An appropriate forecasting process needs the development and usage of proper

forecasting techniques and those can be separated into three techniques, namely:

advanced reservation, historical and the combination of both (Weatherford and

Kimes, 2003). Historical techniques are identified as averages in motion, exponential

polishing and additional retrogressive patterns (Yuksel, 2007; Chen and Kachani,

2007; Lim et al., 2009). Historical techniques are funded on time periods’ analysis

and have the benefit to be easily used with less expecting information (Burger et al.,

2001; Weatherford and Kimes, 2003). In addition to this, historical techniques

depend on the knowledge of specific variable alterations through time and can offer

data on those alterations in the future (Burger et al., 2001). This can be illustrated by

determining what the Average Room Rate (ARR) was during the last few weeks and

calculating what it will most likely be in the next few weeks, for instance. The

principal drawback of historical techniques seems to be that they neglect other

variables regarding the overall demand, the actions of the competitive set or the

exceptional events in the hotel’s location that could generate demand (Yuksel,

2007). However, upcoming time periods techniques seem to continue to be used to a

large extent (Yuksel, 2007; Lim et al., 2009; Lim and Chan, 2011). Historical

techniques represent an integral part of demand forecast and it would be seen

appropriate to investigate how THRM affects them.

Advanced reservations patterns forecast the amount of reserved rooms on specific

days based on the amount of reserved rooms on the precedent day as well as the

rooms’ pick-up on a daily basis (Weatherford and Kimes, 2003). Advanced

reservations patterns can be separated into two categories. Additive patterns are

based on the assumption that the amount of bookings on the books on a specific

date preceding the arrival date is not reliant on the total amount of rooms let

34

(Weatherford and Kimes, 2003). In these patterns, the amount of reserved rooms of

the preceding date is attached to the historical pick-up average between preceding

and arrival dates (Weatherford and Kimes, 2003). However, multiplicative patterns

are based on the assumption that the forthcoming amount of bookings depends on

the ongoing amount of available bookings (Weatherford and Kimes, 2003).

Forecasting those involves multiplying the amount of reservations on the preceding

date to the average historical pick-up average relative rate (Weatherford and Kimes,

2003). Both patterns involve historical elements and consequently have the same

weaknesses as time periods methods mentioned above. The fact that THRM

extends the optimisation of revenue centres within a property could result in

transformed implications regarding advanced reservations patterns.

2.5.4 Decide and Provide Solutions

The development of forecasts is key in supplying mathematical patterns which

generate indications and suggestions for the adjustment of optimum rates and how

these are better structured, the best level of overbooked rooms and support revenue

managers to make the most effective decisions and provide solutions (Bertsimas and

Shioda, 2003; Lai and Wang, 2008). This can be illustrated by a recommendation on

restricting availability for a specific market segment (e.g.: Online travel agencies) at a

particular rate during a given period of time, for instance.

There is evidence of academic literature in RM decision-making and most research

investigate methods that support revenue managers in making better decisions and

in providing solutions to RM related issues (Goldman et al., 2002; Bertsimas and

Shioda, 2003; Baker and Collier, 2003; Kimes and Thompson, 2004; Koide and Ishii,

2005; Ivanov, 2006; Liu et al., 2006) Academics have widely researched

programming models that enable revenue managers to bring solutions to the issues

they may encounter in their function, for instance. The stochastic characteristic of

reservations in relation to demand periods, amount of available nights and rooms,

categories and rates of rooms requires fitting programming models such as

stochastic ones (Lai et al., 2006; Liu et al., 2008). In addition to this, the anticipated

marginal revenue method offers more easiness in calculating data and is more

practical for day to day operations without any expensive and sophisticated IT

system requirements (Ivanov, 2006). Nevertheless, the ambition of scholars to

develop realistic RM operations and demand models may head to the emergence of

more varied RM issues which may need more creative and complex methods to

generate answers. The adoption of THRM seems to enlarge the responsibilities and

35

activities of revenue managers which may affect the way they make related

decisions and provide solutions.

2.5.5 Implement

Hotel teams require training in the application of various sales methods in order to be

effective in the implementation of the RM decisions (Weilbaker and Corcker, 2001).

This can facilitate the team members to close sales at various rates or decline

reservations for short stays so that remaining rooms can be sold for longer duration

and meet the RM objectives (Weilbaker and Corcker, 2001). This involves specific

selling skills and continuous training of employees in order to facilitate RM decisional

implementations (Beck et al., 2011). This step of the RM procedure has not been

researched enough by academics and there is consequently a lack of information in

the literature. However, the research instruments that are developed further in the

following chapter will investigate if THRM impacts this fifth step of the RM process.

2.5.6 Manage Inventory and Distribution

One of the crucial steps of the RM process is inventory management which requires

revenue managers to comprehend when to retain or make available the capacity of

product offerings and services capacity in the inventory to particular bookers (Hayes

and Miller, 2011). As revenue maximisation must be considered from both strategic

(long-term) and tactical (short-term) outlooks, this activity is one of the most

challenging ones (Hayes and Miller, 2011). In addition to this, distribution

management involves the use of intermediaries to support the selling procedure and

the commission extracted by those from the selling price varies according on the

value and contribution that is provided in the selling procedure (Hayes and Miller,

2011). Distribution channels must consequently be given enough attention in order to

optimise revenues and minimise their costs (Hayes and Miller, 2011). The revenue

generated by guests varies amongst them and some guests reserve a room for a

longer period of times than others, for instance (Hayes and Miller, 2011). Similarly, it

is identified that some guests in restaurants buy more food and beverages while

being hosted than others (Hayes and Miller, 2011). One of the main challenges of

distribution management is thus to know when particular intermediaries deliver

guests whose consuming habits are notably more important or less important than

which of guests delivered by other channels (Hayes and Miller, 2011). Revenue

managers have consequently to consider and manage these elements related to

distribution sources (Hayes and Miller, 2011). In the light of this, it would seem

36

appropriate to investigate if inventory and distribution management are influenced

with ancillary services through the adoption of THRM.

2.5.7 Monitor, Reflect on Results, and Adjust Strategies

The last step of the RM procedure involves revenue managers to monitor all other

steps and seek possibilities of action in order to enhance the effectiveness and

efficiency of each step (Emeksiz et al., 2006). This step can be interpreted as

continuous as it is used to amend or improve each of the other steps but however

can be adjusted at the end of the overall process (Emeksiz et al., 2006). RM requires

being used only in the case that it results in a positive impact on profits and this

involves the continuous measurement of the RM process and synergistic elements of

the RMSF (Diagam 1) (Rannou and Melli, 2003; Jain and Bowman, 2005). Moreover,

it is identified that Revenue Generation Index (RGI) constitutes one of the most

detailed evaluation of RM productivity for a hotel as a monitoring tool (Cross et al.,

2009). Regardless of the monitoring through the use of market performance metrics,

the RM process requires the systematic monitoring of its activities and strategies as

well as the adjustment of this monitoring at the end of the process (Emeksiz et al.,

2006; RevenuePerDesign, 2012). The research instruments of this study will

consequently investigate if the adoption of THRM affects this last step of the Total

RM Process (Diagram 6).

2.6 Conclusion of the Literature

This chapter reviewed current thinking regarding the development of RM and

provided some background and depth in the discipline in order to offer a

comprehensive understanding of it. In addition to this, the literature regarding RM as

a systemic framework was critically reviewed and identified inseparable and

synergistic elements to the RM process that are comprised in the RMSF (Diagram 1)

and then integrated in the Total RM Process (Diagram 6). These produces a

dynamic, comprehensive and universal model of the RM process that supports the

hypothesis based on the literature, assuming that the adoption of THRM affects the

RM process and synergistic elements of its systemic framework. The literature

therefore reviewed the subsequent stages of the Total RM Process. Finally, the

literature justifies the research of the effects on the RM process and systemic

framework as both were identified as synergistic and inseparable and can be merged

together to provide a more comprehensive and clear understanding of the

problematic (Emeksiz et al., 2006; Noone et al., 2011; RevenuePerDesign, 2012).

37

CHAPTER 3

RESEARCH AND METHODOLOGY

3.1 Introduction to Research and Methodology

The following chapter discusses the research philosophies, approaches and

methodologies in order to justify the most appropriate ones for this dissertation. The

problematic of the study will be answered by a mixed methods research approach

through a triangulation of quantitative and qualitative data collection methods with

surveys and semi-structured interviews. The chapter consequently discusses mixed

method research which leads to the presentation of the data collection methods,

comprising of the mixed methods design, samples, piloting, analysis, as well as

potential limitations that may have emerged.

The development of this research project is based on a specific investigation process

that comprised fundamental steps which were ordinary to all scientifically based

research (Collis and Hussey, 2013). The first essential stage of the process of the

present research was to identify a research subject which was suggested as a

consequence of personal and professional interests as well as experience. However,

this research encountered difficulties in terms of limiting the extent of its general

interest in the research subject in order to focus on specific concerns which were

sufficiently small to facilitate their investigations (Collis and Hussey, 2013). This is

mainly due to the fact that it is nearly impossible to dissociate and separate the RM

process from specific elements of the RMSF (Diagram 1) as identified in the

literature (Emeksiz et al., 2006; Noone et al., 2011; RevenuePerDesign, 2012). This

is the reason why defining the problematic as a second step required particular

reflexion and adaptation. It was subsequently sought to determine in which manner

the research would be conducted and this require identifying a general research

approach or research paradigm (Collis and Hussey, 2013). The research paradigm

alludes to the evolution of scientific practice funded on philosophies and

presumptions concerning the nature and realm of knowledge (Collis and Hussey,

2013). The fourth step was represented by the development of a research theory on

the basis of theoretical and business evidence by the review of the relevant literature

and the collection of research information that were undertaken through quantitative

and qualitative methods. The quantitative methodology allowed the attempt to

compare variables and enumerate occurrences while qualitative methodology

supported this by emphasising significances and knowledge related to the

38

occurrences (Collis and Hussey, 2013). The analysis and interpretation of the

research information were subsequently required in order to provide valid results

(Collis and Hussey, 2013). The last and sixth stage of the research process which

can also be viewed as a continuous stage starting from the beginning of the research

was to write up progressively and on a weekly basis in order to provide a coherent

research structure and paper.

3.2 Classification of Research Categories

The various kinds of research can be sorted by type by virtue of their objective,

procedure, logic and result (Collis and Hussey, 2013). These factors highlight the

reason why the research is conducted, the manner in which the data is collected and

analysed, whether the research progresses from the general to the specific or the

opposite, and whether it aims to provide a solution to an issue or provide an overall

contribution to knowledge (Collis and Hussey, 2013). The goal of this research is to

investigate the impacts of THRM on the original RM process and synergistic

elements of its systemic framework (Objective) by building a theory with the literature

and collecting data with surveys and semi-structured interviews (Procedure) which

test and confirm this theory or negate it (Result). If categories of research can be

classified in accordance with their objective, analytical, investigative, illustrative, or

predictive research categories are recognised (Collis and Hussey, 2013).

Investigative research is driven towards a research issue in the case that there is a

significant lack of earlier research that can be referred to for knowledge about the

concern (Stebbins, 2001). The goal of this kind of research is to seek models,

concepts or theories, instead of testing a theory. A theory is a concept or hypothesis

that can be verified for connection or cause and effect by concluding coherent results

that can be confirmed or disproved in opposition to empirical evidence (Stebbins,

2001). With this type of research, the emphasis is on cumulating knowledge and

acquaintance with the research topic for more demanding research further on in time

(Stebbins, 2001). Usual methods in investigative research involve analysing historic

and observed data as well as case studies which produce qualitative and

quantitative information. Methods of this type provide flexibility as few restricting

conditions are involved in the collection of information (Stebbins, 2001). The

research evaluates which subsisting possibilities and ideas can be applied to the

concern or if new ones require development. The approach is generally unrestricted

and focuses on collecting a large amount of information and concepts (Stebbins,

39

2001). In this regard, investigative research barely offers conclusions or solutions to

the concerns identified, but provide counselling on where future research should aim

at (Stebbins, 2001). Illustrative research describes existing phenomena and is

employed in order to recognise and obtain data on the particularities of a specific

concern (Collis and Hussey, 2013). Illustrative research may provide responses on

the value of the occupancy rate in specific types of guest segment or on the

competencies required in various groups of revenue managers according to their

hotel RM requirements, for instance. In most cases, the data collection technique

involves statistics and quantitative methods that are generally employed to

summarise the data (Collis and Hussey, 2013). This type of research goes into the

examination of a concern in depth in comparison to investigative research as the

academic commitment aims to verify and portray in words the particularities of the

relevant concerns (Collis and Hussey, 2013).

Analytical research follows the continuity of illustrative research and the research

goes consequently further simply the description of the particularities and have to

analyse and explain the reasons or the factors of specific circumstances and

phenomena (Collis and Hussey, 2013). Therefore, the goal of analytical research is

to comprehend a natural occurrence through the discovery and measurement of

causality amongst them. The data can be gathered on the size of hotels and the

degrees of revenue managers’ turnover, for instance (Collis and Hussey, 2013).

Analytical research may provide responses on to what extent it is possible to

decrease the amount of complaints by guests in hotels or to what degree it is

possible to enhance the delivery times of hotel services, for example. A significant

component of analytical research is the identification and control of the variables in

the activities (e.g.: data collection methods such as surveys) as this allows

recognising causality amongst the particularities that will be explained to a higher

degree (Collis and Hussey, 2013). A variable is a characteristic of a being which may

alter and receive various values that may be subjected to observation or

measurement (Collis and Hussey, 2013). Predictive research exceeds analytical

research in a sense that the latter recognises a justification of reasons for the natural

occurrence in a specific context, while the researcher anticipates on the probability of

an identical context happening somewhere else (Herrington et al., 2007). The

objective of predictive research is to present the outcomes of the analysis as

universal by foreseeing and foretelling certain natural occurrences on the foundation

of theorised general connections (Herrington et al., 2007). Predictive research may

provide answers on the location of the most profitable place to open a new hotel or

40

on which type of distribution channels enhances the sales of the rooms of a property,

for instance. Therefore, the answer to an issue in a specific research can be

applicable to an identical concern somewhere else if the predictive research can

offer a strong and reliable answer, based on a bright comprehension of the pertinent

reasons (Herrington et al., 2007). This type of research offers solutions on where,

why, and how to phenomena and also to identical future phenomena which support

problematics that are enquired (Herrington et al., 2007).

The present research project illustrates in which manner the adoption of THRM

impacts the Total RM Process (Diagram 6) and some inseparable elements of the

RMSF (Diagram 1). This research can thus be identified as a descriptive or

illustrative one as its academic commitment is to verify and depict the particularities

of the concerns, in particular the impacts of the aforementioned adoption and

consequently its possible evolution following those impacts. However, this research

reaches the bridge between illustrative and analytical research as the aim is to

understand the impacts of THRM in hotels by measuring and investigating them.

3.3 Inductive and Deductive Approaches

Saunders et al. (2009) differentiates two research approaches, namely: deductive

and inductive research (Refer to appendix 7). The research approach which is

identified as inductive is an approach in which a hypothesis is constructed on the

basis of the collection and analysis of empirical evidence and therefore universal

conclusions are inducted as a result of specific cases, which is in opposition to the

deductive approach (Saunders et al., 2009). As it implies the movement from

observing individually to stating general models, it is described as shifting from the

particular to the universal (Saunders et al., 2009). In this case, a research can

involve the observation of food processing records in which the level of production

decreases after three hours of a shift and the conclusion can be that the level of

production alters within work shift duration, for instance (Saunders et al., 2009). The

other research approach which is described as deductive is an approach in which a

hypothetical or conceptual design is developed and involves testing it by observing

and analysing empirical information (Saunders et al., 2009). Therefore, specific

cases are deduced from universal conclusions (Saunders et al., 2009). For that

purpose, the deductive research approaches are described as the movement from

the general to the specific and a related research can involve the reading of

theoretical evidence of motivation and desire to test them in a particular job site

41

(Saunders et al., 2009). Even if the inductive approach is more attached to the

interpretive research philosophy while the deductive approach to the positivism

research philosophy which will be developed further in the next section, it is believed

that these connections do not correspond to genuine practical value and that the

combination of both approaches are mutually advantageous (Saunders et al., 2009).

The discussion of the various categories of research supports the understanding of

the chosen research and methodology as well as the identification of the most

effective manner to conduct it. One of the most significant points in all research

projects is to acknowledge that one specific research project can be illustrated in

numerous manners with its objective, procedure, logic and results (Saunders et al.,

2009). Some researchers may undertake an applied and analytical research by

employing quantitative techniques while a long term research allows the use of

quantitative and qualitative methods, deductive and inductive research approaches,

and will shift progressively from investigative and illustrative research to predictive

and analytical research as it is the case in this dissertation. The understanding of the

key categories investigated above allowed this research project to describe clearly

what needed to be undertaken and to determine which specific phases of the

research were required in order to provide valid outcomes.

In this regard, the research approach of this research project is mainly deductive as

the effects of THRM on the RM process and relevant aspects of its framework can

be deduced by the investigation of academics and business sources available. The

developed hypothesis can subsequently be tested by data collection methods that

involve research surveys, and semi-structured interviews. The hypothesis can

consequently be amended after and as a result of the observation, analysis, and its

outcomes. Nevertheless, some features of the inductive research approach are

borrowed in order to investigate particular aspects of the problematic which are

identified by the first data collection technique (Surveys) and by the review of

theoretical and business evidence (Review of the literature). This allows more

flexibility and the collection of qualitative information as some aspects of the

problematic are scarcely able to be adjusted due to specific lack of academic

research.

3.4 Research Philosophies

The objective of this section is to identify and discuss which research philosophy was

required to conduct the present research project. Business and management

42

scientific based investigations and research require being aware of the philosophical

commitments which are caused through strategic research choices (Johnson et al.,

2006). The various types of research philosophies can be differentiated with five

philosophies, namely: subjectivist, positivist, realistic, interpretive and pragmatic

(Refer to appendices 5 and 6) (Saunders et al., 2009). The aforementioned

philosophies are distinguishable by the data collection and analysis methods

attached to them and that are employed during a research project (Saunders et al.,

2009). The positivist and realistic philosophies are connected to the deductive

research approach and this tandem is maintained by a cross sectional time horizon

as well as decisions of mono method or mixed methods which altogether constitute

an array of research strategies such as surveys, experiments, case studies and

other research activities, for instance (Saunders et al., 2009).

Nevertheless, for the approach to the research of RM, some may prefer to adhere to

the opinion that the objective features of RM are less significant than the manner in

which the revenue managers attach their own personal significances to their function

and the manner they consider their functions to be performed (Saunders et al.,

2009). This approach matches the research philosophy identified as subjectivist and

would aim to understand the significances that people attach to social natural

occurrences (Saunders et al., 2009). This philosophy advocates that it is

indispensable to investigate the subjective significances that motivate the actions of

social actors for the purpose of enabling the research to comprehend these actions

(Saunders et al., 2009). Social actors such as guests that may be subjected to

research in a hotel may put various interpretations on the circumstances in which

they are exposed to, for instance (Saunders et al., 2009). In this regard, individual

guests might perceive various circumstances in different manners as a result of their

own opinion of the world (Saunders et al., 2009). These various interpretations may

influence their actions and interactions with other and consequently the research

subjects (Guests) interact not only with their environment but also look for

interpretations of these actions and interactions (Saunders et al., 2009). In this

regard, the subjectivist philosophy argues that guest service is generated through

social interactions amongst hotels and guests and is continuously being adjusted as

a consequence of this (Saunders et al., 2009). This means that there is never a

certain entity named guest service as it continuously evolves (Saunders et al., 2009).

Realism is another research philosophy relating to scientific inquiry (Saunders et al.,

2009). The nature of realism is that what perceptions exhibit as reality is the truth

43

(Saunders et al., 2009). This philosophy is a division of epistemology that resembles

to the positivist philosophy as it takes a scientific position to the development of

knowledge (Saunders et al., 2009). This presumption supports the data collection

and its understanding and this significance becomes unambiguous when two types

of realism are differentiated (Saunders et al., 2009). Direct realism advocates that

what is observed constitutes what is obtained and that what is experienced with

senses depicts the society with precision (Saunders et al., 2009). Critical realism

advocates that what is experienced constitutes emotional impressions and not the

direct things (Saunders et al., 2009). Therefore, the critical realistic philosophy

argues that knowledge of reality is a consequence of social conditioning and is not

comprehensible independently of social actors (Saunders et al., 2009).

The research philosophy which is identified as interpretive advocates that people

involved in a research project require comprehending disparities between people in

their contribution as social actors (Saunders et al., 2009). The aforementioned

philosophy consequently emphasises on research amongst individuals in preference

to non-human beings (Saunders et al., 2009). For example, these non-human

entities can be represented by computers, systems, processes and instruments

(Saunders et al., 2009). The interpretive philosophy implies that researchers require

entering the world of the individuals who are attached and linked to their research for

the purpose of acquiring the outlook and insights of those individuals (Saunders et

al., 2009). One of the most significant aspects of the interpretive philosophy is the

necessary adoption of an empathetic viewpoint (Saunders et al., 2009). The involved

task is to go inside the world of the research subjects and comprehend it from their

angle (Saunders et al., 2009).

Contrary to the interpretive research philosophy, the research philosophy which is

defined as positivist requires adopting a scientific posture and disposition towards

the research project (Saunders et al., 2009). The above mentioned research

philosophy can be described as “working with an observable social reality and that

the end product of such research can be law-like generalisations similar to those

produced by the physical and natural scientists” (Remenyi et al., 1998, p.32). Solely

phenomena which are observable generate therefore information with valid credibility

(Saunders et al., 2009). The research strategy that involves the collection of

information is consequently existing theoretical evidence that generates possibilities

and these possibilities are tested in order to be confirmed or negated (Saunders et

al., 2009). Those consequently conduct the research project to further development

44

in accordance with the test results (Saunders et al., 2009). In addition to this, the

positivist research philosophy prescribes an exceptionally well structured

methodology for the purpose of making duplication more easy (Gill et al., 2002). In

this regard, the emphasis is on the observation of quantifiable data that may conduct

the researcher to undertake statistical analysis (Saunders et al., 2009).

Nevertheless, this philosophy allows the employment of both qualitative and

quantitative data for the purpose of testing a developed theory or hypothesis by

using quantitative information during interviews, for example (Saunders et al., 2009).

The research philosophy which is defined as pragmatic prescribes that the most

significant decisive factor of the axiology, ontology and epistemology adopted is the

problematic (Saunders et al., 2009). The ontology represents the researcher’s view

of the nature of reality, the epistemology acts for the researcher’s view concerning

what constitutes acceptable knowledge while the axiology is the researcher’s view of

the role of values in research (Saunders et al., 2009). In the light of this, if the

problematic does not imply clearly the adoption of an interpretive or positivist

philosophy, this demonstrates the pragmatic’s outlook which is completely possible

to function with the axiology, ontology and epistemology. This reflects that mixed

methods, both quantitative and qualitative are feasible and potentially exceptionally

appropriate within a research project (Saunders et al., 2009). It is prompted that it

could be more suitable to consider the research philosophy used as a continuity in

preference to contrary opinions (Tashakkori and Teddlie, 1998). The pragmatic

research philosophy can be intuitively of interest as it can allow staying away from

committing in debates about ideas and concepts as facts (Tashakkori and Teddlie,

1998).

Following the aforementioned research philosophies, the research philosophy of the

present paper could be identified as being a pragmatic research philosophy as the

view chosen is to enable a better answer of the problematic (Ontology) (Saunders et

al., 2009). In the light of this, both observable natural occurrences and subjective

meanings provide valid knowledge upon the research question and different

perspectives are integrated in the research in order to support the interpretation of

the data (Epistemology) (Saunders et al., 2009). Indeed, the intricacy of THRM

needs the application of quantitative information which was collected by way of

surveys through qualitative techniques by way of semi-structured interviews as it

required a second interpretation through social conditioning in order to get a more in

depth understanding. In addition to this, as the present research investigates the

45

impacts of THRM on the RM process and some indivisible elements of its framework

from both objective and subjective angles, the axiology of pragmatism is in phase

with this and allows to provide more credible results. Finally, the pragmatic research

allows the use of mixed method designs with both quantitative and qualitative data

collection which suited perfectly this research which is based on pragmatic

philosophy aligned with mixed methods data collection techniques (Saunders et al.,

2009).

3.5 Qualitative and Quantitative Approaches

Research may also be distinguished by considering the qualitative or quantitative

approach undertaken by the research (Neuman, 2005). A quantitative approach can

be preferred as its objective characteristics focuses on the measurement of natural

occurrences and thus implies the collection and analysis of numerical information

applied with statistics (Neuman, 2005). However, a qualitative approach can be

desired and its subjective characteristics imply the examination and reflection on

impressions for the purpose of comprehending social activities (Neuman, 2005). One

of the first parts of this research was to opt for the most suitable approach that

matches the research aim and objectives. An amount of researchers seem to avoid

the option of quantitative research as they are unconfident with statistical data and

believe that a qualitative approach would involve less difficulties (Neuman, 2005).

However, even if designing a quantitative research might seem time consuming, the

easiness of conducting the analysis and develop a written review is substantial as it

provides a superior structure (Neuman, 2005).

The approach in which the research employs the collection and analysis of both

quantitative and qualitative data is called mixed methods research (Saunder, et al.,

2009). Mixed methods have appeared in the last decade as a constantly more

popular approach in numerous disciplines (Creswell, 2011). The definition of mixed

methods research have changed from the combination of two methods to the

combination in all stages of the research process which lead it to be identified as a

singular methodology (Tashakkori and Teddlie, 1998). Comprised into this process

would be combining philosophical approaches (Pragmatism), eventual deductions

and the manner in which results and findings are interpreted (Creswell, 2011). Mixed

methods, both quantitative and qualitative, are feasible and potentially exceptionally

appropriate within a research project (Saunders et al., 2009). Mixed methods are

identified as the mix of qualitative and quantitative approaches in the methodology of

46

a research project (Tashakkori and Teddlie, 1998). This methodological emphasis is

strengthened by the perception that mixed methods research is subjected to an

evolution in which it becomes an independent methodological approach with its own

ethos, vocabulary, and instruments (Tashakkori and Teddlie, 2003).

This research on the adoption of THRM and its impacts on the original RM process

and inseparable components of its framework was consequently conducted by both

quantitative (Questionnaires) and qualitative (Semi-structured interviews) research

as it provides a synergistic analysis and understanding which seem to offer more

relevant outcomes. First and foremost, it was consequently sought to collect

objective and numerical information such as the amount of revenue managers which

used revenue software that integrated THRM, for instance. Secondly, it was

necessary to collect more subjective information about how a given revenue

software could integrate THRM, for example. The decision of opting for both

quantitative and qualitative research was influenced by the nature and

characteristics of this research project as well as for philosophical preferences.

However, the accessibility and availability of various types of data that were

negotiated and arranged as well as the research problematic, represented a

convincing factor to orientate philosophical preferences towards this particular angle.

3.6 Mixed Methods Research Design

Research designs are represented by processes to collect, analyse, interpret and

report information in research projects (Creswell, 2013). They constitute various

models which have specific titles and processes attached to them (Creswell, 2013).

The knowledge of the principal types of research designs and their objectives,

challenges, implications and strengths allowed the present research project to be

conducted rigorously. This paper was consequently supported by a typology based

approach to research designs by the comparison and selection of a specific design

amongst others in order to attach it to the research aims and objectives (Creswell,

2013). Creswell (2013) identifies 6 types of mixed methods designs, namely:

convergent parallel design, explanatory sequential design, exploratory sequential

design, embedded design, transformative design and multi-phase design.

The research requirements of this paper matched with the explanatory sequential

design. This research design is constituted of two different interactives phases

(Creswell, 2013). This begins with quantitative data collection and analysis which

47

prioritise on addressing the problematic of the research project (Creswell, 2013).

This first stage involves subsequently qualitative data collection and analysis which

are interpreted to explain the primary quantitative results in more depth (Creswell,

2013). The explanatory design seems to be the most direct mixed methods design

amongst the others and highly appropriate to identify how the adoption of THRM

impacts the Total RM Process (Diagram 6) and synergistic components of the RMSF

(Diagram 1) (Creswell, 2013).

The first stage of this research project supported by mixed methods research thus

involved the design and implementation of a quantitative strand that comprised data

collection and analysis through questionnaires. The questionnaires aimed to identify

where THRM impacts the aforementioned elements. The second stage involved the

identification of particular quantitative results that called for more information and

applying those results to lead the creation of the qualitative strand which was

represented by semi-structured interviews (Qualitative research method) (Creswell,

2013). The high amount of answers regarding the impacts of THRM on RM

performance metrics in the quantitative results led to a theme related to RM

performance metrics in the semi-structured interviews for further explanation, for

instance. The aim was to refine the qualitative research method questions in order to

follow up with the quantitative results (Creswell, 2013). The quantitative results

guided and orientated the articulation of the qualitative research questions. In this

case, the qualitative research stage depended on the quantitative results (Creswell,

2013). The third stage of this research project was to implement the qualitative stage

through qualitative data collection and analysis (Creswell, 2013). The last step

involved consequently the interpretation to what degree and in which manner the

qualitative results provided explanations and insights in the light of the quantitative

results and how those contributed to knowledge by way of achieving the objectives

required for meeting the aim of this study (Creswell, 2013).

The advantages of the explanatory sequential design were to be able to implement it

with ease as the two-stage structure allowed the conduction of both quantitative and

qualitative techniques in different stages and the collection of one kind of information

separately (Creswell, 2013). Moreover, the final dissertation was straightforward to

write and may provide an unambiguous outlining for readers as both quantitative and

qualitative phases and sections are subsequent (Creswell, 2013). Finally, the

explanatory research design borrowed from emergent approaches in which the

second qualitative stage was designed on the basis of the results from the previous

48

quantitative stage (Creswell, 2013). One of the main challenges of functioning with

this design was to spend a large amount of time in the implementation of the two

quantitative and qualitative stages. Moreover, the development of the qualitative

research method depended on the identification of the quantitative results which

required further explanation as the first stage needed to be completed sooner.

3.7 Stage 1: Quantitative Research Method

Stage one represented the quantitative element of the research and implied the

design, implementation, piloting and analysis of surveys. The tool and its structure

were developed on the basis of the hypothesis developed through the review of the

literature in order to provide an initial test of the hypothesis. It was of paramount

importance to enable the findings of the quantitative stage to provide a better

understanding of the impacts of THRM on the RM process and parallel elements of

its framework. Moreover, the quantitative results were required to design the second

research instrument and adapt its questions accordingly. The particular details of the

questionnaire design, questions and participants’ selection as well as the collection

and analysis of data will be developed further in this section. The definitions of

questionnaire and survey are often left imprecise in academic research or applied in

various kinds of contexts, and often interchangeable (Collis and Hussey, 2013). In

this paper, the term questionnaire or survey are interchangeable and have been

applied purposely to refer to the instrument used for the collection of quantitative

data (Creswell, 2013). A survey is constituted by a set of questions and can be

employed as an online form or by a structured script conducted by an interviewer

(Harell et al., 2009). The online form was definitely more adequate for the present

research as it saved time and reached a larger audience which was not easily

accessible (Hotel revenue managers) (Saunders et al., 2009). The advantage of

online surveys was also its affordable nature in comparison to phone, email, and

face-to-face surveys (Saunders et al., 2009). However, the limitation of this

technique is that it does not offer detailed information and plays the role of indicator

but the collected data was subsequently tested further through semi structured

interviews (Saunders et al., 2009).

The quantitative research instrument used for the present research was

consequently a 15 questions self-administered online survey and comprised 4

sections (Refer to appendices 8 and 9). This survey asked anonymously perceptions

on the impacts of the adoption of THRM on the RMSF (Diagram 1) and the Total RM

49

Process (Diagram 6) and is divided into 4 sections (16 questions overall), namely:

Introductory questions, Impacts on the elements of the RM framework, Impacts on

the overall RM process, and Impacts on the stages of the RM process. The first

section aims to identify the respondents’ origins and their approach to THRM. The

second section aims to understand perceptions about the impacts of THRM on some

aspects of the RM framework while the third section does similarly regarding the

impacts of THRM on the overall RM process. Finally, the last and fourth section has

for purpose to identify perceptions concerning the effects of THRM on the different

steps of the RM process. The survey was programmed on Google Forms, an

application provided by Google in order to create and distribute online self-

administered surveys (Google Forms, 2015). The surveys were proposed to 28

revenue managers in 4 to 5 stars hotels in which there were at least three revenue

centres (e.g.: rooms, food and beverage outlets and spas). The reason for this

selection is justified by the ease of access due to the fact that the survey recipients’

requirements matched with the researcher’s network of industry contacts, but also

regarding the properties’ level of service (4 to 5 stars). Moreover, 4 and 5 stars

properties matched the requirements of the problematic as they usually offer a larger

offer in terms of services (e.g.: rooms, food and beverage outlets and spas). The

survey was piloted by sending it directly by email or LinkedIn messages to revenue

managers. The data was then collected, quantified through diagrams and then

analysed on the basis of the 28 respondents between July and August 2015

(GoogleForms, 2015). The quantitative results were analysed through diagrams

using Google Form (Statistical Package).

In addition to this, the creation through Google Form was piloted in June 2015 in

order to enhance the relevance of the results, anticipate on the long research

protocol, and use the results in time to develop the second qualitative research

instrument (Refer to appendix 8). The answers provided general and objective

evidence on the effects of THRM on the RM procedure and other relevant

components of its framework from a broader perspective (Saunders et al., 2009). It

also supported the research theory which is based on theoretical evidence of

academic and business literature. Self-administered online surveys were collected

on the basis of the respondents and saved time to develop the research theory and

to identify effects of THRM on the RM process and framework with existing academic

and business literature (Saunders et al., 2009). One of the limitations of this survey

is that it was answered by only 28 revenue managers from various backgrounds

50

which reduced the scale and detail of analysis. Finally, in order to facilitate the

accessibility, the survey also required to be very concise and totally anonymous.

3.8 Stage 2: Qualitative Research Method

Stage 2 represented the qualitative element of the research and implied the design,

implementation, piloting and analysis of semi-structured interviews. The instrument

and its structure were developed on the basis of the quantitative results and analysis

and in order to provide more details from its most significant indicators on the

impacts that THRM may have on the RM process and some aspects of its

framework. The questions of the interview guide emerged consequently from the

quantitative findings. Semi structured interviews also represented an opportunity to

test the hypothesis developed on the basis of the literature review a second time. It

seemed important to enable the findings of the quantitative stage to go through a

more detailed analysis. The specific aspects of the semi-structured interview guide,

questions and participants’ selection as well as the collection and analysis of data

will be developed further in this section.

The review of the literature on different RM processes and the stages of the

potentially most comprehensive RM process showed that the RM is defined and

applied differently by various academics and practitioners. The semi-structured

interview therefore constituted the most suitable qualitative research method to

address the problematic and aims of the present research as it offers more flexibility

(Bryman and Bell, 2015). One of the defining particularities of semi-structured

interviews is that they possess a flexible and flowing structure in opposition to

structured interviews which have a structured series of questions to be proposed

identically to all interviewed persons (Bryman and Bell, 2015). The structure of semi-

structured interviews is generally organised around an interview guide which

contains subjects and areas to be explored during the interview process (Bryman

and Bell, 2015). The objective was to undertake a flexible approach in the manner in

which questions were asked and regarding their content. Some areas were thus

more developed than others depending on the interviewed revenue manager. The

flexibility of this research method in opposition with the quantitative methods

represented altogether synergistic and complimentary methods of data collection

and analysis. All semi-structured interviews were transcribed and manually coded.

Qualitative data analysis involved a coding process which was essential to structure

the information and facilitate the analysis and construction of the findings (Cooper et

51

al., 2006). Therefore, topic coding which identifies material through themes was used

as well as descriptive coding for storing data (Cooper et al., 2006).

The semi-structured interview guide was proposed to three revenue managers which

were selected on the basis of the quantitative results which provided indications

(Refer to appendix 10). The three revenue managers participated in the self-

administered survey and were contacted by email in order to organise a semi-

structured interview. The interview guide comprised of seven themes which emerged

from the analysis of the quantitative results. Those seven themes constituted the

most significant impacts of the adoption of THRM on the Total RM Process (Diagram

6) and synergistic elements of its systemic framework that were integrated into it.

The seven subsequent themes explored with the interviewed revenue managers

were, namely: revenue IT systems, performance metrics, teams and human

resources concerns, guest-centric RM, and stage 1, 2 and 3 that all represent a

constituent part of the Total RM Process (Diagram 6).

3.9 Conclusion of Research and Methodology

This chapter discussed alternative research methodologies and approaches and how

the research methods selected address the problematic. This research can thus be

identified as descriptive as its academic commitment is to verify and depict the

particularities of the concerns of the adoption of THRM. The research approach of

this dissertation is mainly deductive as the effects of THRM on the RM process and

relevant aspects of its framework were deduced by the investigation of academics

and business sources available. Finally, this chapter justified that the aim of the

study required a pragmatic research philosophy aligned with mixed methods

research involving online self-administered surveys and semi-structured interviews.

CHAPTER 4

RESULTS, FINDINGS AND DISCUSSION

4.1 Introduction to the Chapter

The following chapter presents the quantitative results and qualitative findings of

both surveys and semi-structured interviews. The review of the literature exhibited

interests of academics and practitioners in specific elements of the RMSF (Diagram

52

1) and RM processes which supported the creation of the Total RM Process

(Diagram 6). The hypothesis developed on the basis of those interests assumed that

the adoption of THRM may impact on those specific elements. In order to facilitate

this research project, those specific elements of the RMSF were thus merged with

RM processes resulting in the comprehensive and integral Total RM Process.

The quantitative and qualitative results both aimed to confirm or negate this

hypothesis. The following chapter consequently presents the statistical analysis of

the results and the qualitative analysis of the findings which are combined with the

discussion and are linked to the developed hypothesis and aim of the study.

Quantitative results, qualitative findings and the discussion are consequently

combined in one interconnected chapter as it seems to appropriately meet the mixed

methods approach, as well as avoiding repetition. This combination also offers a

more comprehensive understanding of the results and findings which are directly

related to the aim and to previous academic and practitioner research. This chapter

is thus constituted of two subsequent sub-chapters, namely: Quantitative Results

and Discussion as well as Qualitative Findings and Discussion. In this regard, results

and findings are not discussed concurrently as the results provided indications to

generate the findings. They are however interconnected to each other when it seems

necessary and relevant.

4.2 Quantitative Results and Discussion

The quantitative results provided general and objective evidence on the effects of

THRM on the RM process and other omnipresent components of its framework from

a broader perspective. The presentation of the quantitative results are presented in

the following part and divided according to the four different sections of the online

self-administered survey that was proposed to 28 revenue managers. The results

are also interpreted, explained and support the answer to the problematic as well as

the critical evaluation of the overall study. All results are referred to 15 different

graphs which correspond to the 15 questions of the survey (Refer to appendix 12).

4.2.1 Introductory Questions

Graph 1

The segmentation of four level of service provided by the properties of the

respondents is illustrated in Graph 1 (Refer to appendix 12). In the light of this, 12 of

the 28 respondents work for 4 stars hotels, 10 other respondents work for 5 stars

53

hotels, 5 respondents for 5 stars luxury hotels and 1 respondent from a palace or

over 5 stars. Those numbers indicate that the overall results should be seen mainly

from 4 and 5 stars level of service perspectives due to the low number of survey

respondents above this level of service. Due to the length restriction of this research

project, the analysis of the quantitative results per level of service has not been

undertaken and the main function of Graph 1 was to provide a general idea of the

respondents’ background. This represent one of the limitations of this research

project as it was not possible to follow up these results.

However, those results may confirm that THRM is commonly adopted by upscale

hotels from 4 to 5 stars due to their level of service and additional services

representing other sources of revenues (Noone et al., 2011). This is legitimised by

the fact that all respondents were more or less exposed to THRM and therefore were

able to pursue the self-administered survey. This consequently confirms that the

selection of quantitative research subjects was appropriate for the examination of the

effects of the adoption of THRM on the RM process and synergistic elements of its

systemic framework.

The second function of Graph 1 was to support the research in the selection of the

research subjects for semi-structured interviews. Graph 1 consequently highlights

that 42.9 percent of the respondents came from a 4 stars background while 35.7

percent came from a 5 stars background, altogether constituting 78.6 percent of the

total respondents. Another 17.9 percent of respondents came from a 5 stars luxury

background. The aforementioned numbers thus led the qualitative research to select

qualitative research subjects from most significant respondents’ backgrounds.

Graph 2

The second question of the survey asked revenue managers whether they embraced

a THRM approach or not by optimising other revenue streams of their property than

rooms only. Graph 2 consequently demonstrates that most of the respondents adopt

a THRM approach in their property by optimising ancillary services (Refer to

appendix 12). 27 of respondents constituting 96.4 percent answered a yes while one

respondent only answered a no.

This exhibits that THRM is now well adopted in most 4 to 5 stars hotels and that it

could definitely affect some aspects of the RM process and omnipresent elements of

its framework.

54

Those results partially confirm the hypothesis based on the literature as they

demonstrate an evolution of the perception and application of RM as a more

strategic discipline and encompassing all sources of revenues in a property (Helsel

et al., 2006). In the light of this, the survey research proposed from Kimes (2011)

that assessed opinions of revenue professionals regarding the shift from a room

focused optimisation function to a holistic discipline focused on all revenue streams

is further confirmed by the aforementioned results. Finally, those may demonstrate

that the adoption of THRM results in a more comprehensive function of RM that

integrates all revenues and increase the responsibilities of hotel revenue managers

(Cross et al., 2009).

Graph 3

The segmentation of the revenue centres that are subjected to the application of RM

is illustrated in Graph 3 (Refer to appendix 12). In this regard, the results

demonstrated that most optimised revenue centres are rooms and food and

beverage outlets. All of the respondents answered that they apply RM in all room

types and this is contrasted with the total absence of answers for “not all room types”

which showed that rooms are optimised equally despite their categories and that RM

is not applied to a category of room types only (Refer to appendix 12). In addition to

this, 23 respondents answered that they applied RM on all food and beverage outlets

while 4 answered that their application of RM do not concern all food and beverage

outlets. This highlights that THRM can be partly applied on additional revenue

centres and there might be reasons for this; such as the consideration of a poor

time-required/revenue-generated ratio resulting of its optimisation, or that RM

applied to ancillary services (THRM) may affect the perception of the product in a

negative way, for instance. In addition to this, 8 respondents mentioned optimising all

function spaces while 7 other respondents answered that they do not optimise all

function spaces but just a part of it. The total answers for the optimisation of all food

and beverage outlets and only a part of it constitute 96.4 percent of total respondents

while the total answers for the optimisation of all function spaces and just a part of it

constitute 53.6 percent. This exhibits that the optimisation of food and beverage

outlets is more present than the ones of function spaces in hotels. Finally, 12

respondents representing 42.9 percent of the 28 revenue managers answered that

they optimise spa services. This puts both function spaces and spa services at a

similar level of importance. However, no respondents answered optimising leisure

activities, health clubs, transports, extra services and gambling facilities.

55

In the light of the aforementioned results, it seems that THRM only impacts on 3

other revenue centres than rooms, namely: food and beverage outlets, function

spaces, and spa services.

Those results partially confirm and disprove the theory built on the basis of the

literature as THRM is defined as the optimisation of ancillary services such as food

and beverage outlets function and meeting spaces as well as spa treatments (Noone

et al., 2011). However, THRM does not restrain to the aforementioned additional

revenue centres as those represent the possible hotel revenue streams also for gym

facilities and services (e.g.: classes or coaching sessions), golf courses, casino

services and other ancillary services (e.g.: transports, cooking workshops, private

spaces in nightclubs and karaoke rooms) (Kimes, 2011; Noone et al., 2011). The

results of Graph 2 also highlight that academic research seems to be more

sophisticated than practice regarding THRM as scholars paid attention to the

optimisation of golf courses and gambling facilities (Refer to appendix 1). Indeed,

although scholars have only paid attention to revenue centres as separate elements

and not as a whole with THRM, the application of THRM of the survey respondents

seem less holistic than academic research. This exhibits the intricacy of

understanding the perception and application of revenue managers in THRM as it is

used in different manners with different revenue centres. In the light of this, it partially

negates the literature-based hypothesis as golf courses and gambling facilities

amongst other revenue centres do not seem to be optimised (Refer to appendix 12).

Graph 4

The fourth question asked revenue managers whether their discipline where

performed on property or centralised in regional offices or head offices. The main

objective of this question was to assess if there was a possible link between the

THRM approach adopted and the fact that a property‘s RM application was

conducted by a superior entity such as a centralised office. The results showed that

all participants were performing RM on property while 57.1 percent of them also had

a centralised team which supports them. There was an absence of pattern between

the questions of on-property only revenue managers (12 respondents) and both

centralised and on-property revenue managers (16 respondents) with all of their

responses throughout the survey and thus to their perception on the adoption of

THRM (Refer to appendix 12).

56

The results of this graph and the segmentation of both on-property and on-

property/centralised RM has consequently not be seen relevant enough to be taken

into account in the overall analysis. This consequently limited the research to the

analysis and interpretation of the combination of both on-property and centralised

perspectives regarding the adoption of THRM.

Graph 5

The fifth graph aimed to know if the respondents promote a THRM culture within all

departments of their hotels. This was a way to assess clearly if they are entirely

committed to THRM and if there was a potential impact on teams, involving the

coordination of RM activities amongst various departments and services such as

amongst food and beverage outlets’ teams, spas, and meeting and events’ teams in

charge of function spaces, for instance. The results which are displayed on Graph 5

provided a disparate view on the promotion of THRM culture (Refer to appendix 12).

Moreover, 14 of total respondents answered promoting a THRM culture within all

departments of their properties while the other 14 refuted promoting it.

This highlights that two schools of THRM exist, the one integrating all actors together

in the application of RM and another focusing on the application of THRM only from

the revenue manager’s perspective and as its own concern. The results of Graph 5

therefore exhibit that the promotion of a THRM culture is not an indispensable

implication of its adoption. In addition to this, the results are half in opposition with

the developed hypothesis as the particular competencies that revenue managers

require are of paramount importance in their function in order to promote a RM

culture throughout the property which are operated (Lieberman, 2003). As a

consequence, the assumption that the adoption of THRM may considerably impact

this aspect of revenue managers’ required abilities is thus partially confirmed and

negated with half of the results against the others.

Graph 6

Graph 6 divides the believers that some revenue streams do not deserve to be

optimised due to a poor time-required/revenue generated ratio resulting of its

optimisation (Refer to appendix 12). The results demonstrated that 24 revenue

managers considered that some revenue centres were not worth being optimised

and applied RM to it.

57

However, 4 respondents considered that all revenue streams deserved to be

optimised even if according to the results of Graph 3, those respondents did not

optimise all of them (Refer to appendix 12). In the light of the results of Graph 3

where most respondents answered optimising rooms, food and beverage outlets and

some function spaces or spa services, it is identified that most respondents still

consider that some revenue centres are not worth being optimised due to a weak

time-required/revenue-generated ratio.

This demonstrates again that most revenue managers subjected to this research

project adopt THRM but only on parts of their revenue centres and ancillary services,

and not the entire property’s ones. The results of Graph 6 consolidate the results of

Graph 3 as some additional revenue centres are not subjected to revenue

optimisation. The results of Graph 3 can consequently be interpreted through the

results of Graph 6 as the absence of optimisation in some additional revenue centres

seem to be mainly due to a poor time required/revenue generated ratio. In the light of

this, the results of Graph 6 are relatively in phase with the literature as the adoption

of THRM seems to be relatively complex, time consuming and laborious as tracking

total guests’ expenditures generate the introduction of new implications (Orkin,

2003).

Graph 7

The seventh question is a logical consequence of the sixth question and aimed to

evaluate which revenue centres do not worth it in the eyes of the believers that some

revenue streams do not deserve to be optimised due to a poor time-

required/revenue generated ratio resulting of its optimisation. The results exhibits

that the believers of the aforementioned theory felt that gambling facilities (22), extra

services (24), transports (18), health club (24), and leisure activities (10) were less

worth being optimised due to the high amount of answers on those (Refer to

appendix 12). However, 5 respondents answered that it was not worth optimising

spa services and 4 answered identically for function spaces while one respondent

considered food and beverages outlets’ optimisation to be worthless. This

demonstrates a discrepancy in revenue managers’ views and that some ancillary

services can be considered as a subject of the application of RM such as leisure

activities which are considered worth being optimised by 18 revenue managers even

if not being optimised. That can be due to a time issue, or an absence of resources,

for instance. In addition to this, 10 revenue managers do not consider transports as

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not worth it while 6 believe similarly for gambling facilities. This exhibits that even if

not being optimised, those can be considered for RM.

This puts intricacy in answering where THRM affects the RM process and framework

as it is seen different by various revenue managers and may impact only partly the

aforementioned elements as involving only a part of revenue centres and teams. The

results of Graph 7 thus consolidate the results of Graph 3 but however add intricacy

regarding the perceptions of revenue managers on the adoption of THRM. Those

exhibit that the consideration of revenue managers does not restrain to rooms, food

and beverage outlets, function spaces and spa treatments. In some cases, they also

consider possible hotel revenue streams also for gym facilities and services (e.g.:

classes or coaching sessions), golf courses, casino services and other ancillary

services (e.g.: transports, cooking workshops, private spaces in nightclubs and

karaoke rooms) (Kimes, 2011; Noone et al., 2011). In this regard, their perception of

THRM can be identified as sophisticated as academics but this is limited to a small

amount of individuals (Refer to appendix 3). In opposition to their perception, their

application of THRM does not seem as sophisticated as academic research following

the quantitative results of Graph 3 as this is limited to rooms, food and beverage

outlets, function spaces and spa treatments.

4.2.3 Impacts on the elements of the Revenue Management framework

Graph 8

The eighth question of the survey asked revenue managers on which elements of

the RMSF (Diagram 1) does THRM impact (Refer to appendix 12). The results

demonstrated that in the eyes of all respondents THRM affects revenue IT systems,

teams and individual employees as well as the information required in the application

of RM. This exhibited the most significant impact of THRM on the RMSF (Diagram

1). In addition to this, 27 respondents answered that THRM affects intentions of

guests 21 others agreed that ethics and perception of fairness are also affected by

the adoption of THRM. This showed that the adoption of the aforementioned

approach considerably involves guests, their perceptions and buying behaviours.

Unexpectedly, only 11 respondents answered that the adoption of THRM affects the

RM process. This was probably due to the fact that the RM process was introduced

independently from other inseparable elements of the RMSF (Diagram 1) (Refer to

appendix 12). Another reason could be that in the eyes of the respondents,

59

performing the RM process is more or less similar even if applied on additional

revenue centres. Moreover, only 3 respondents answered that the adoption of THRM

impacts on bookings. Finally, the overall results provided indicators on where the

most significant impacts of THRM remain on the RM framework.

The most significant impacts of THRM are consequently affecting the revenue IT

systems, required data and information, teams and employees, ethics and

perception of fairness, intentions of guests and finally a moderate effect on the RM

process which constituted only 39.9 percent of agreement from total respondents.

Suitable revenue IT systems are indispensable for taking through process a large

collection of information (Guadix et al., 2010). The larger amount of information

required with the adoption of THRM consequently affects revenue IT systems. In this

regard, accurate data is required about the strategies of the competitive set, events

in the destination, commercial transactions of ancillary services from additional

revenue centres, and additional information which concern supply, demand, and

end-of-the-month results (Barth, 2002; Hogenboom, 2012). The significant impact of

THRM on revenue IT systems is interconnected to the one on the required data and

both consequently confirm the developed hypothesis based on the literature

assuming that the adoption of THRM could affect those elements of the RMSF

(Diagram 1).

Moreover, planning and implementing RM require necessary human resources

implications (Tranter et al., 2008; Selmi and Dornier; Beck et al., 2011).

Academics have a shared opinion on the fact that revenue teams and other

concerned departments are essential for successfully operating RM (Tranter et al.,

2008). The significant impact of THRM on teams and individuals is therefore in

phase with the developed hypothesis based on the literature as the integration of

more revenue centres seems to result in the integration of more individuals. This

also seems to result in the enlargement of particular skills and training that revenue

managers require as they are of paramount importance in their function in order to

make informed and effective decisions (Lieberman, 2003).

In addition to this, the results of Graph 8 demonstrated a high impact of THRM on

guest intentions and perception of fairness. This can be related to previous research

as the discipline of yield management seems to be intimately linked with CRM,

initiating guest-centric RM (Noone et al., 2003). RM and CRM have received a lot of

attention from scholars and both can have separate goals and timescales (Milla and

60

Shoemaker, 2008). However, both disciplines are considered as synergistic and

should altogether result in combined business decisions based on intertwined

strategies (Noone et al., 2003). In this regard, the quantitative results exhibit that the

adoption of THRM seems to be closely connected to guest-centric RM as it affects

significantly the implications of guests. The results of Graph 8 also confirm the

developed theory as the evolution from a tactical RM to a more guest-centric

approach initiating guest-centric RM is occurring concurrently with the adoption of

THRM (Noone et al., 2011). The high impact of THRM on ethics can also be linked

to the hypothesis as academics emphasise on the watchfulness required amongst

teams due to high turnover rates which might result in leaked confidential knowledge

(Kimes and Wagner, 2001). The fact that THRM extends the audience of RM within

a property thus seems to result in higher risks of revealing trade secrets to the

competitive set. The perception of fairness is also affected and that can be explained

by the fact that guests tend to tolerate price irregularity for rooms but maybe not for

ancillary services depending on their nature (Hwang and Wen, 2009).

Finally, the unexpected and moderate impact of THRM on the RM process may

highlight the opposite perceptions of revenue managers regarding different RM

processes as they have been widely differentiated in various manners through

numerous practitioners’ on-hands manuals and academic research. However, the

results of Graph 8 concerning the effects of THRM on the RM process partially

confirm the developed hypothesis as the process of the function is significantly

shifting from a tactical market driven pricing technique to a more strategic and

holistic one (Kimes, 2011). The Total RM Process (Diagram 6) which integrates

synergistic elements of the RMSF (Diagram 1) is attached to the fifteenth question

and might rally or oppose revenue managers regarding the effects of THRM on the

RM process.

Graph 9

The ninth question requested perceptions of revenue managers on how the adoption

of THRM affects other elements of RM that were not displayed in the model of the

RMSF (Diagram 1). The elements were divided into three categories, namely:

performance metrics and measurement, RM principles, and CRM. Only 3

respondents answered that RM principles were affected while all of the respondents

agreed on the fact that performance metrics and measurement were impacted by the

aforementioned adoption. In addition to this, 19 respondents answered that CRM

61

was impacted. This last result can be linked to the results of Graph 8 which

demonstrated a significant impact on ethics and perception of fairness as well as

intentions of guests (Refer to appendix 12).

This exhibits again the importance of the affection on guest implications by the

adoption of THRM and confirms again the developed theory as the evolution from a

tactical RM to a more guest-centric approach initiating guest-centric RM is occurring

concurrently with the adoption of THRM (Noone et al., 2011). In addition to this, the

results of Graph 10 demonstrate that performance metrics and measurement are of

paramount importance in the study of the impacts of the adoption of THRM on the

RM process and some synergistic elements of its framework. This confirms the

assumption that THRM affects the performance metrics which are crucial in the

development of RM strategies and in the decision-making process of revenue

managers (Hoogenboom, 2012).

Graph 10

The selection of 10 performance metrics used by the respondents is illustrated in

Graph 10 (Refer to appendix 12). While 24 respondents all agreed on the use of

Market Penetration Index (MPI), Revenue Generation Index (RGI), and Average

Rate Index (ARI), only 5 answered using Gross Operating Profit Per Available Room

(GOPPAR) and 3 for Revenue Per Available Based Inventory Unit (RevPATI). The

lack of answers for the use of GOPPAR is contrasted with the use of TrevPAR

representing 27 answers. In addition to this, all respondents answered using

Revenue Per Available Room (RevPAR), 16 for the use of Revenue Per Seat Hour

(RevPASH), 14 for the use of Revenue Per Available Square Meter (RevPASqM)

and 13 for the use of Revenue Per Available Treatment Hour (RevPATH).

The overall results of Graph 10 reflect the results of Graph 3 as the optimisation of

each additional revenue centre seems to affect each RM performance metric (Refer

to appendix 12). Moreover, the results of Graph 10 consolidate the results of Graph

9 which exhibited a high impact of THRM on performance metrics and measurement

(Refer to appendix 12). Finally, Graph 10 demonstrates that THRM significantly

impacts the performance metrics used by revenue managers. Consequently, it is

demonstrated that performance metrics are of paramount importance in the study of

the impacts of the adoption of THRM on the RM process and some synergistic

elements of its framework. This confirms the assumption that THRM affects the

62

performance metrics as most performance metrics approved in the survey were

THRM related metrics which aim to measure ancillary services’ revenue performance

(Orkin, 2003; Kimes, 2005; Kimes and Singh, 2009).

4.2.4 Impacts on the overall Revenue Management process

Graph 11

The eleventh question of the survey introduced the respondents to a potential model

of the RM process where THRM may impact and then asked them if they agreed

with the presented model. The model which is the Total RM Process (Diagram 6)

was created on the basis of the theory developed by the review of the literature and

its aim was to be meaningful to the largest group of revenue managers possible. The

results of Graph 11 demonstrated that 27 respondents constituting 96.4 percent of

total respondents agreed with the presented model. Although only 39.3 percent of

total respondents responded that THRM impacts on the RM process in the results of

Graph 8, this is contrasted with a high score with the presentation of a

comprehensive and universal model of the RM process in the eleventh question.

That can be explained by the fact that in this model of the RM process, all stages are

detailed and inseparable elements of the RMSF (Diagram 1) are integrated. This

consequently provided a better visibility to the respondents in order to reflect on the

potential impacts that THRM have on the RM process. However, only 1 respondent

answered not agreeing with the proposed model and this can be due to the fact that

the respondent did not embrace a THRM approach by optimising other revenue

streams of the property other than rooms, as a reflect of the single negative answer

in Graph 2 (Refer to appendix 12). The results of Graph 11 consequently

demonstrated that the developed model based on academic and practitioner

research revealed itself relevant in the identification of potential impacts of THRM on

the RM process and some implications such as knowledge and data, revenue

practices, metrics, revenue teams, guest interactions, and revenue IT systems

(RevenuePerDesign, 2012; Hospa, 2013; Emeksiz et al., 2006; Noone et al., 2011).

63

Graph 12

The twelfth question aimed to assess on which strategic aspects THRM impacts.

The results demonstrated that the most significant strategic aspects that are

impacted by the adoption of THRM are demand creation with 27 answers and value

proposition with 26 answers. However, 17 respondents answered that THRM have

impacts on market positioning with 60.7 percent of total respondents. The results of

Graph 12 highlighted that THRM considerably affects demand creation, value

proposition, and more moderately market positioning (Refer to appendix 12).

Those results can be linked to some results of Graph 8 which identified a high impact

on perception of fairness and intentions of guests as guests represent demand and

are subjected to the value proposition (Hayes and Miller, 2011). Moreover, the

results of Graph 12 confirm the model of the RM process proposed by Noone et al.

(2011) as it includes the aforementioned strategic aspects which are identified as

synergistic with the adoption of THRM. The last stage of the RM process involves

revenue managers to monitor all other steps and seek strategies continuously in

order to enhance the effectiveness and efficiency of other stages (Emeksiz et al.,

2006). In this regard, the results can also be linked to the continuous stage of the

Total RM Process (Diagram 6) which consists of monitoring activities and strategies

as well as the last stage consisting of monitoring and adjusting strategies (Emeksiz

et al., 2006; RevenuePerDesign, 2012).

Graph 13

The thirteenth question asked revenue managers on which other aspects could

THRM impact. 25 respondents answered that THRM impacts on a guest-centric

philosophy, 28 considered that THRM influenced the willingness to pay, and 15

mentioned that THRM affects value-based optimisation (Refer to appendix 12). This

last result can be linked to the results of Graph 12 which demonstrated a moderate

impact on the value proposition and is contrasted with 3 answers for price-based

optimisation. In addition to this, the 28 answers for the impact on the willingness to

pay can be connected to the results of Graph 8 which demonstrated a considerable

impact on intentions of guests.

Finally, the high rate of answers for guest-centric philosophy (89.3 percent) and for

willingness to pay (100%) rallies the results of Graph 8, 9 and 12 together as

connected towards the implication of guests regarding the impacts of THRM on

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intentions and perceptions of guests illustrated in the RMSF (Diagram 1) and linked

to the results of Graph 8. This rallying consequently confirms that THRM have a

correlation with guest-centric RM where interactions with guests and guest-centric

RM strategies might be changed in the light of the optimisation of ancillary services

(Noone et al., 2011).

Graph 14

Graph 14 assessed if the respondents were aware of a new performance metric that

could be related to THRM and the evolution of revenue optimisation in hotels (Orkin,

2006, p.158). 89.3 percent of respondents answered that they are not aware of the

Revenue Per Available Guests (RevPAG) while only 14.3 percent knew about the

performance metric. These results demonstrated that the perception of THRM and

its adoption are limited in contrast with the perception of Orkin (2006, p.158) who

stated that “a future vision for revenue management speaks of a day when each

guest is a market segment of one and the availability of rates for a requested stay

would depend on a guest’s past history or forecasted future with the hotel”.

Finally, even if some aspects of guests seem to be highly impacted by the adoption

of THRM and that THRM is interconnected with guest-centric RM or might be the

source of it; this impact remains limited from the hotels’ operation approach to

performance measurement (Refer to appendix 12). The results consequently

highlight that even if with the adoption of THRM, the RM process evolves from a

tactical to a more holistic and guest-centric procedure, the application of it does not

always entirely match with academic research.

4.2.5 Impacts on the stages of the RM process

Graph 15

The segmentation of the stages of the RM process that are potentially impacted by

the adoption of THRM is illustrated in Graph 15 (Refer to appendix 12). In the light of

this, 28 respondents answered that the THRM impacts on stage 1 and stage 2 of the

RM process, namely: define objectives, collect information and analyse as well as

forecast. Moreover, 26 answered that THRM impacts on stage 1 which consist of

developing prerequisites, segment market and develop a pricing basis. There was

also a moderate impact on stage 6 of the RM process with 11 respondents for

inventory management and distribution and 15 respondents answered that there was

65

an impact on stage 5 which involves implementation. In addition to this, additional

moderate impacts were identified on stage 4 and stage 7 which involve decisions

and solutions (15 respondents) as well as monitoring and strategies’ adjustment (15

respondents).

The overall results of Graph 15 consequently highlighted more and less significant

impacts on some stages of the RM process. In order to investigate more in depth the

impacts of THRM on the aforementioned elements, the decision has been made to

only focus on the most significant impacts such as on stage 1, 2 and 3 of the Total

Hotel RM Process (Diagram 6). This represents a limitation in the research but

seemed necessary to benefit from the advantages of the qualitative research that

follows. In the light of this, it seems that THRM affects the construction of RM

prerequisites such as the development of a competitive set, as it may require to be

considered from total revenue perspectives (Forgacs, 2013). Moreover, the market

segmentation might also be affected as it might divide guests into different groups

and the product offerings might be adapted to those guest segments (Forgacs,

2013). The adoption of THRM also seems to affect the establishment of rates and

strategic pricing which are crucial as they communicate to potential guests the value

assigned on offerings (Hayes and Miller, 2011). THRM therefore appears to affect

how pricing is operated according to the above results.

The second significant impacts is identified on stage 2 which involves the

establishment of predetermined objectives with particular long term, medium term

and short term timescales (Noone et al., 2011). These objectives comprise the

values of market and performance metrics which can be linked to results of Graph 10

and will be investigated further with the qualitative findings (RevenueByDesign,

2012). Stage 2 also involves the collection of data by revenue IT systems and THRM

appears to impact this implication which might be due to an array of new information

such as THRM performance metrics or guest total expenses, for instance. Moreover,

the results exhibited an important effect of THRM on stage 3 of the RM process. This

stage is a logical consequence of stage 2 as it involves the analysis of some

collected information and the way forecasts evolve with the adoption of THRM will be

investigated in the qualitative findings. Finally, the interpretation of the overall results

of Graph 15 shows that the impacts are experienced and perceived from various

manners which make answering the problematic more complex. However, the results

confirmed that THRM affects the RM process despite the moderate results of Graph

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8 which received only 11 answers regarding this. This consequently makes the

developed model of the RM process more credible and valid to support the study.

4.2.6 Conclusions of Quantitative Results and Discussion

The overall quantitative results exhibited that it is highly complex and can seem

ambiguous to answer where THRM affects the RM process and framework as it is

perceived differently by various revenue managers and may impact only a property

partly as involving only a part of revenue centres and teams. In addition to this, the

most significant impacts of THRM are consequently affecting the revenue IT

systems, required data and information, teams and employees, ethics and

perception of fairness, intentions of guests, performance metrics as well as some

stages of the RM process. The results thus confirm partly the developed theory

based on the review of the literature of the present research. Finally, the results play

the role of indicators to be followed up by qualitative research with semi-structured

interviews. The most significant results were consequently used in the development

of semi-structured interview questions in order to provide a more comprehensive

understanding of the most significant impacts on the RM process and elements of its

framework following the adoption of THRM. In order to ease the semi-structured

interview procedure, some quantitative results were merged under one theme to be

covered during the interviews. The significant quantitative results on guest intentions

and perceptions as well as CRM, demand creation and value proposition were

consequently gathered under the theme of guest-centric RM for the semi-structured

interview guide, for instance. Similarly, the relevant impact on the required data and

information which is an element of the RMSF (Diagram 1) was merged with Stage 2

of the Total RM Process (Diagram 6) as it involves data collection. However, some

quantitative results were not merged together due to their significance and weight in

the results. In this regard, performance metrics as well as revenue IT systems and

Stage 2 of the Total RM Process which involves metrics and the collection of data by

systems are all three explored separately in the following sub-chapter (Emiksiz et al.,

2006; Guadix et al., 2010).

4.3 Qualitative Findings and Discussion

The qualitative findings provided subjective evidence on the effects of THRM on the

RM process and synergistic elements its systemic framework from a narrowed

perspective. The questions and findings of the three semi-structured interviews

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followed up the quantitative results which indicated and identified the most significant

impacts of THRM on the aforementioned components.

The presentation of the qualitative results is developed in the following part, related

to the problematic and literature-based hypothesis and is divided according to the

seven themes covered during the semi-structured interviews. The findings are

consequently presented per theme and not per interviewee, interconnecting all three

interviewees’ insights together. This approach seemed to ease the analysis and to

provide a clearer understanding of the impacts while contrasting and discussing

insights from the three interviewed revenue managers (Refer to appendix 10).

4.3.1 Revenue IT systems

The first section of the semi-structured interview aimed to provide further details

regarding the impacts of THRM on revenue IT systems or software that supports the

RM process. In the light of this, all interviewees provided similarity in their answers

and expressed that the adoption of THRM impacted significantly the interface and

services provided by revenue IT systems as well as the way revenue managers use

it. This exhibits the importance of THRM and reflects the theory as it is shown in the

literature that the IT systems’ interface affects significantly the opinion of revenue

managers as well as their disposition to proceed along computerised forecasts

(Schwartz and Cohen, 2004). The adoption can therefore affect revenue IT systems;

Interviewee 1 declared that “Our revenue software automatically analyses and

assesses all Property Management System (PMS) data encompassing information

about all revenue centres in order to model demand”. In addition to this, the

forecasts that are produced from the revenue IT systems seem also to provide

forecasts of total revenues as well as sold room nights, seat hours, treatment hours,

and square meter hours (Interviewee 1, Interviewee 3). This is in phase with the

literature as hotels which use revenue IT systems acquire a factor that lead them to

success in forecasting decision- making, for instance (Emeksiz et al., 2006). The

effects of THRM on systems appear therefore to offer competitive edge and in

supporting revenue managers in considering the most effective decisions (Guadix et

al., 2010). Some revenue IT systems are only focused on one revenue centre such

as function spaces (Interviewee 3). In the light of this, those provide a reporting

baseline which enhance and offer a clearer visibility on function spaces revenue

performance and adopt a tailored approach to function spaces in collecting and

analysing related data as well as in recommending adapted tactical and strategic

actions (Interviewee 3). Some revenue IT systems can consequently produce a

demand forecast for the function spaces of a property, for instance (Interviewee 3).

68

In the light of this, this validates the hypothesis as THRM impacts the way revenue

IT systems operate as well as the reports they produce, and the insights and

suggestions they provide to influence the opinion of revenue managers (Schwartz

and Cohen, 2004).

However, it seems that the adoption of THRM does not always affect revenue IT

systems. Interviewee 2 stated: “We do not have revenue software that considers

total revenue performance as it only supports us in the optimisation of rooms”. In this

regard, some revenue IT systems do not offer the possibility to adapt their services

to other revenue centres than rooms and only provide services and

recommendations for accommodation RM (Interviewee 2). This exhibited that there

is a discrepancy amongst the services provided by revenue IT systems and that not

all revenue IT systems evolved with the adoption of THRM in a given property. The

insights of Interviewee 2 consequently negate the hypothesis as THRM does not

affect systems in this case. This highlighted a limitation in answering the problematic

and regarding the selection of interviewees as it would have been more accurate to

select interviewees who experienced effects of THRM on their revenue IT systems in

order to entirely benefit from the qualitative research method.

4.3.2 Performance metrics

This section of the semi-structured interview aimed to assess how the adoption of

THRM impacts performance metrics that represent a component of the RM process.

One of the key metric in THRM is Revenue Per Available Time Based Unit

(RevPATI) and means that revenue managers measure the revenue gained over a

period of time periods related to the performance based on the primary output of

profit centres (Interviewee 1). In addition to this, the term “RevPATI” is used to

englobe all THRM related performance metrics such as RevPAR, RevPASH,

RevPATH, and RevPSqM (Interviewee 1). This can be explained that as for rooms’

revenue it corresponds to available rooms, for food and beverage outlets revenues it

corresponds to seat hours, for spas it corresponds to treatment hours, for instance

(Interviewee 3). This can be illustrated by Table 1.

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Table 1: Comparison of Performance Metrics per Revenue Centre

Rooms Function

spaces

Food and

beverage

outlets

Spas

Sold unit One room One square

meter

One seat One treatment

hour

Total

inventory

All rooms All function

spaces

All seats All treatment

hours

RevPATI RevPAR RevPASqM RevPASH RevPATH

Source: Adapted from (Interviewee 3)

This above table illustrates the comparison of performance metrics per revenue

centre and their significance as RevPATI (Interviewee 3).

The qualitative findings indicated that the proper adoption of THRM involves the

systematic application of new metrics (Interviewee 2). The RM metric Catering

Revenue per Occupied Group Room (CRpOGR) is another new metric that can be

used, for instance (Interviewee 2). This involves the tracking of food and beverage

covers per group room and the establishment of minimum food and beverage levels

in contracts, but developing metrics which track revenue and profit per occupied

group room can represent a proper way of operating (Interviewee 2). Additional

metrics can include revenue per square foot, profit per square foot and revenue per

available seat hour (Interviewee 2). These findings contribute to knowledge as

almost no literature analysed the evolution of performance metrics in details (Refer

to appendix 1). In addition to this, those confirm the hypothesis as an emergence of

new metrics related to THRM is recognised and they become indispensable for

revenue managers in their practice and development of RM strategies

(Hoogenboom, 2012).

In properties that adopt and embrace THRM, these aforementioned performance

metrics would appear on the monthly profit and loss report (Interviewee 2). Similarly,

these performance metrics would appear on the end-of-the-month report that is

submitted to the board of directors for monthly business review meetings

(Interviewee 1). In addition to this, once new performance metrics become a usual

70

element of weekly and monthly revenue meetings, these results in more emphasis

on the selection of business from a THRM perspective (Interviewee 1; Interviewee 2;

Interviewee 3). Since a THRM adoption requires constantly tracking metrics across

additional revenue centres, the quality of the information provided by the PMS is of

paramount importance (Interviewee 3). Tracking RevPAR by room category by time

periods in order to more distinctly recognise propositions of value is also related to

the adoption of THRM. Low performances of RevPAR might indicate that volume or

prices are not aligned with demand facts and that can be amended by adjusting

those (Interviewee 3). The adoption of THRM seems to have one principal objective:

to increase the Gross Operating Profit (GOP) which is calculated by subtracting

operating expenses to total revenues (Interviewee 1). In this regard, the application

of Gross Operating Profit Per Available Room (GOPPAR) can support the revenue

manager in the measurement of its hotel performance (Interviewee 1).

These last insights demonstrate that the adoption of THRM affects RM performance

metrics and contribute to the emergence of new ones. Moreover, the adoption of

THRM affects the role of those RM performance metrics in the management of

properties as their importance seems to be incremental. The findings can

consequently be connected to the literature as new metrics are used for the analysis

of end-of-the-month results similarly with original RM metrics (Barth, 2002).

4.3.3 Teams and Human Resources concerns

This section of the semi-structured interview aimed to assess how the adoption of

THRM impacts teams and employees which represent a key element of the RM

process. One of the most significant impacts of the adoption of THRM on the RM

process is that it involves more strenuously the role of the revenue manager in its

process as it implies the optimisation of all revenue streams which enables them to

leverage tactical and strategic actions across revenue centres and attached teams

(Interviewee 1). This means that while most revenue managers focus principally on

rooms division, they need to spend as much time with other departments in order to

optimise their revenues (Interviewee 3). In addition to this, Interviewee 3 declared:

“we strive with the revenue team to promote a THRM culture across all departments

of the property, and this starts from training individuals with RM principles to make

them actual actors of the revenue optimisation of their revenue centre”. In the light of

this, Interviewee 2 stated: “an array of different colleagues now join the weekly

revenue meetings and the participation of various departments during these

meetings are considerable before the adoption of THRM”. This exhibits the required

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ability of revenue managers to promote a culture throughout the hotels which is

operated (Lieberman, 2003). The skills required of the revenue manager following

the adoption of THRM increase and involve training abilities, coordination, and

communication for a larger audience (Interviewee 1). Those findings demonstrate

that the teams and individuals experience an evolution concurrently with the

adoption of THRM and confirm that the responsibilities of revenue managers are

consequently increased (Mainzer, 2004; Tranter et al., 2008). These provoke the

evolution of particular competencies and training that a revenue manager requires

which are critical in their function in order to make effective decisions (Lieberman,

2003).

Interviewee 1 declared: “I believe that the role of the revenue as never became as

strategic as it is with the adoption of THRM, as she or he often prescribes practices

and operational guidelines to other departments”. This exhibited that the role of the

revenue manager becomes highly strategic with the adoption of THRM and that its

importance on a property has considerably increased as it can guide parallel

departments. The investigation of the aforementioned problematic thus confirms the

fact that RM is such a constituent part of a hotel that it often prescribes the

procedures, practices, communication and tasks (Helsel et al., 2006). In the light of

this, this confirms the theory that the adoption of THRM results in an evolution of the

RM function from an emphasis on rooms to a more holistic function that integrates

and influences all departments; RM is consequently no longer a profit optimisation

discipline alone but a strategic discipline that provides holistic analytical insights

(Cross et al., 2009).

4.3.4 Guest-centric Revenue Management

The fourth section of the semi-structured interview aimed to evaluate how the

adoption of THRM affects some implications related to guests and if it was provoking

the guest-centric RM approach. The application of THRM practices seems to affect

guests’ perception of fairness as it is identified that in upscale hotels, it can be more

difficult to make guests understand the price discrepancy between two identical spa

treatments but at different times, for instance (Interviewee 1). In this regard, while

RM practices applied to rooms are now common and well known from guests, it

seems that THRM practices which can be new in some properties impacts on guests’

perception of fairness (Interviewee 1). One of the reasons for this is that it is not

common or understood by guests, but it can also be from a product positioning point

72

of view (Interviewee 1). For example, selling identical dishes at different times in a

fine dining restaurant is not in phase with the product positioning and service image

of prestige and high standards (Interviewee 1). The above findings can therefore be

linked to the fact that guests tend to tolerate RM practices if the reasons for charging

services with various rates are understood (Hwang and Wen, 2009). Due to the fact

that the adoption of THRM does not seem common in the eyes of the clientele, the

findings confirm the theory that the adoption affects guests and more particularly

their perception of fairness. This can be connected to the fact that the adoption of

THRM accentuates guest-centric RM (Noone et al., 2011).

This can be contrasted with the fact that although it can impact on the guests’

perception of fairness, it can generate considerable demand if well adopted

(Interviewee 2). In order to reduce the impact on guests’ perception of fairness,

some THRM practices can only be used in the creation of packages with rates and

offers that are determined in advance (Interviewee 2). This confirms the model of the

RM process proposed by Noone et al. (2011) which highlighted a correlation

between THRM and packaging activities that influence the RM process. This

consequently influences potential guests on their willingness to pay (Interviewee 2).

However, it seems hard to avoid a negative perception of fairness if those practices

are applied on a daily basis to staying guests (Interviewee 2). The aforementioned

findings can be linked to the fact that THRM and guest-centric RM are

interconnected and that the adoption of THRM provoke an even more guest-centric

approach of the RM process (Noone et al., 2003). Interviewee 3 declared: “If the

adoption of THRM is successful, THRM corresponds to guest-centric RM”. In the

light of this, the adoption of THRM involves a deep knowledge of each guest’s value

or each guest’s segment value (Interviewee 3). The most profitable clientele can

consequently be recognised and strategies can be adopted accordingly (Interviewee

3). This can be resumed by tailoring services and value proposition to each guest

segment or in the extreme to each guest in the eyes of their revenue potential, and

this occurs with the adoption of THRM. This can be explained by the fact that THRM

is not entirely adopted if segmentation per guest with total expenses is not

considered. The above findings confirm that THRM have a correlation with guest-

centric RM where interactions with guests and guest-centric RM strategies change in

the light of the optimisation of ancillary services (Noone et al., 2011). Those can be

interpreted in a sense in which THRM leverages guest-centric RM as its adoption

and impacts on the RM process seem to involve much more guest implications.

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Finally, the findings of this section confirm the literature-based theory as the adoption

of THRM significantly affects guest implications.

4.3.5 Stage 1 of the RM process: prerequisites, market segmentation and

pricing

The fifth section of the semi-structured interview aimed to assess how THRM

impacts on stage 1 of Total RM Process (Diagram 6). The adoption of THRM seems

to impact implications of market segmentation as it involves tracking profitability per

segment considering total expenses of guests (Interviewee 1). This puts intricacy in

developing appropriate market segmentation as it is difficult to determine which

segment provides the best revenue flows and this information is often know only for

rooms as well as food and beverage outlets and not all additional revenue centres

such as spas and function spaces, for instance (Interviewee 1). This confirms the

hypothesis as THRM affects the original market segmentation which divides guests

into different groups and adapts product offerings to those guest segments (Forgacs,

2013). Moreover, this modifies and develops traditional customer segmentation

dividing guests into groups according to their behaviour with a primary division into

transient and group followed by the reason for travel such as leisure or corporate

(Hayes and Miller, 2011). THRM involves consequently considering and integrating

information from all revenue centres in order to create market segments. This is in

phase with the fact that market segmentation is more efficient when a property tailors

its product offerings to market segments that constitute the highest value in terms of

profitability and provide them with perceivable competitive advantages arising from

ancillary services, for instance (Hayes and Miller, 2011).

In addition to this, THRM involves dynamic pricing of food and beverage outlets’

menus (Interviewee 3). Conference planning manuals can offer a variety of rates for

catering menus such as for banquets and this makes rate management based on

demand much more easy (Interviewee 3). In this regard, meeting rooms are also

shifting from a static rate management approach to dynamic pricing based on

demand and seasonality (Interviewee 3). A meeting room which is exposed to a

higher level of demand on a given day compared to another day with a lower level of

demand will see its price change, for instance (Interviewee 3). Interviewee 2 stated:

“We assess our pricing on the basis of the overall revenue streams per segment in

order to quote more interesting prices”. This also confirm the hypothesis as THRM

affects original market segment pricing allowing hotels to have a basis and evaluate

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future price sensitiveness per guest segments (IDeaS, 2005). This consequently

demonstrates that concurrently with the adoption of THRM, properties have to

develop competencies to quote dynamic rates for all revenue centres as it is already

realised with the rooms division. In the light of this, the findings confirm the

hypothesis that THRM also affects the original establishment of rates and strategic

pricing which are crucial as they communicate to guest segments the value assigned

on offerings (Hayes and Miller, 2011). THRM consequently impacts how pricing is

operated as it identified as becoming more holistic and considering all potential

revenues.

4.3.6 Stage 2 of the RM process: define objectives and data collection and

analysis

This section of the semi-structured interview aimed to evaluate how the adoption of

THRM affects stage 2 of Total RM Process (Diagram 6). When adopting THRM,

hoteliers seem to require understanding the demand for all revenue centres and their

link to demand in rooms division (Interviewee 2). THRM implies therefore the

consideration and integration of specific information from all revenue centres as well

as its analysis in order to optimise revenues (Interviewee 1). This information

represent the number of bookings and the amount of generated revenues for specific

period of times not only for rooms, but also for spa services, food and beverage

outlets and function spaces, for instance (Interviewee 1). This exhibits that the data

is collected from all revenue centres and may imply a more holistic and strategic

approach to data collection. This confirms the theory developed on the basis of the

literature as the adoption of THRM affects Stage 2 which involves the establishment

of predetermined objectives with particular long term (strategic), medium term

(tactical) and short term (operational) timescales (Noone et al., 2011).

In this regard, revenue managers can define and adjust their objectives according to

a wider amount of data collected and analysed (Interviewee 3). A revenue manager’s

objective could therefore aim to push demand in period of low demand for spa

services with specific offers or packages in a period of high demand for rooms, for

instance (Interviewee 3). Regarding the analysis of the data, THRM impacts on the

overall displacement analysis (Interviewee 2). In the light of this, THRM relies on

more detailed and holistic analysis of data in order to strategically accept or turn

down businesses and that involves the calculation of guest expenses per revenue

centres (Interviewee 2). The displacement analysis is therefore encompassing total

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guest expenses and all revenue sources and profitability ratios can be considered

(Interviewee 2). Moreover, even if RevPAR, TRevPAR, occupancy and ARR

constitute the elementary performance metrics which are subjected to benchmark

report tracking, statistics to food and beverage outlets are coming forth from

benchmark reports (Interviewee 1). This consequently demonstrates the impacts of

THRM on data analysis as new data related to ancillary services other than rooms

are emerging in benchmark reports. In addition to this, the above findings affect the

definition of objectives of Stage 2 which all involve the values of market and

performance metrics and targets (RevenuePerDesign, 2012). These are

interconnected with the findings of the section on performance metrics as the

adoption of THRM affects the role of those in the management of properties as their

importance is seen incremental. The findings can consequently be linked to previous

research as new metrics are used for the analysis benchmark reports similarly with

original RM metrics (Barth, 2002). Finally, the above findings legitimise the

hypothesis which assumed that THRM impacts on the RM process.

4.3.7 Stage 3 of the RM process: forecast

The seventh section of the semi-structured interview aimed to assess how THRM

impacts on Stage 3 of the Total RM Process (Diagram 6). In this section, all

interviewees shared similar insights about the impact of THRM on demand forecasts.

As THRM affects Stage 2 of the RM process regarding data collection, forecast are

consequently conducted for additional revenue centres in order to provide future

data from wider sources (Interviewees 1, 2 and 3). This confirms the hypothesis as

the adoption of THRM impacts demand forecasts which includes the use of various

data in order to provide revenue managers with predictive information regarding

future progress of supply, demand and performance metrics (RevenueByDesign,

2012).

The forecasts are therefore including both advanced reservations and historical data

approaches but from all revenue centres that are optimised (Interviewee 1). This

demonstrates that THRM affects the use of historical techniques that are identified

as averages in motion, exponential polishing and additional retrogressive patterns

(Yuksel, 2007; Chen and Kachani, 2007; Lim et al., 2009). In addition to this, this

also exhibits that THRM impacts advanced reservations techniques in forecasts

which originally forecast the amount of reserved rooms on specific days based on

the amount of reserved rooms on the precedent day as well as the rooms’ pick-up on

a daily basis (Weatherford and Kimes, 2003). The approach is thus similarly adopted

76

with THRM but on ancillary services. However, academic research regarding

forecasts seem more explorative than hotel practitioners as some academic

concepts of historical and advanced reservations techniques seem to go beyond

what is put in practice (Interviewee 1, 2, 3).

However, due to the fact that forecasting demand is time consuming, it can be

generally applied for rooms and food and beverages outlets only, despite the aim to

optimise other ancillary services (Interviewee 2).This demonstrates a limitation in the

impacts of the adoption of THRM on forecasts as the effects are not always

influencing all revenue centres. In the light of food and beverage forecasts, booking

paces and denials can be tracked in order to calculate total demand as detailed as

possible and in the same way of forecasting rooms (Interviewee 1). This

consequently allows forecasting unconstrained demand for food and beverage

outlets as it is done with rooms (Interviewee 1). The above findings therefore confirm

the hypothesis based on the literature review as THRM definitely affects Stage 3 of

the RM process in terms of demand forecasts. However, the effects assumed in the

hypothesis are identified as limited due to discrepancies between academic research

and what is put in practice in the hospitality industry.

4.3.8 Conclusions of qualitative findings

The overall qualitative findings exhibited that it is relatively complex and can seem

ambiguous to answer where THRM affects the RM process and framework as the

effects of its adoption can be experienced in different manners. The adoption of

THRM may impact only an aspect of the RM process or of the RM framework

according to various revenue managers. In addition to this, the qualitative findings

provided a more detailed overview of the impacts of THRM on some stages of the

RM process as well as some indivisible components of its framework. The qualitative

findings consequently tested a second time and re-confirmed partly the developed

theory based on the review of the literature of the present research, as only parts of

the developed theory are affected by the adoption of THRM. Finally, the findings

provided a more comprehensive understanding of the aforementioned impacts and

allowed the present research to be more accurate in answering its problematic and

in meeting its third objective.

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4.4 Conclusions of Results, Findings and Discussion

The overall quantitative results and qualitative findings exhibited that it is highly

complex and can seem ambiguous to answer where THRM affects the RM process

and synergistic elements of its systemic framework as it is perceived differently by

various revenue managers and may impact only some aspects as comprising

specific revenue centres and teams. Moreover, the discussion has demonstrated

that the most significant impacts of THRM are consequently affecting the revenue IT

systems, required data and information, teams and employees, guest-centric RM,

performance metrics as well as some stages 1, 2 and 3 of the Total RM Process

(Diagram 6). The results and findings thus confirmed partly the developed theory

based on the review of the literature of the present research and that the adoption of

THRM results in the evolution of the RM process and synergistic elements of its

systemic framework, from a tactical room focused to a much more strategic and

holistic process (Noone et al., 2011).

CHAPTER 5

GENERAL CONCLUSION, LIMITATIONS, AND FUTURE RESEARCH

5.1 Conclusions of the Research Project

This research project aimed to explore how the adoption of THRM affects the original

room focused RM process and some inseparable and synergistic elements of the

RM systemic framework such as revenue Information Technology (IT) systems,

teams, performance metrics, data and guests’ implications. In order to meet this aim,

the dissertation achieved subsequent objectives comprising the review of the

literature that discussed current thinking in RM and orientated this research towards

a sensible and reliable hypothesis that was developed upon academic and

practitioner research. These produced a model of RM as a systemic framework. In

the light of this, insights on RM processes were merged with the aforementioned

model. These resulted in the creation of a dynamic, comprehensive and universal

model of the RM process that supported the hypothesis based on the literature as

well as the overall research project. Alternative research methodologies and

approaches and how the research methods selected addressed the problematic

were justified and resulted in the decision that the aim of the study required a

pragmatic research philosophy aligned with mixed methods research involving online

self-administered surveys and semi-structured interviews (Saunders et al., 2009).

78

The overall quantitative results and discussion demonstrated that it was highly

complex and ambiguous to answer where THRM affects the RM process and

framework as it is perceived differently by various revenue managers and may

impact only a property partly as involving only a part of revenue centres and teams.

In addition to this, the most significant effects of THRM were identified on the

revenue IT systems, required data and information, teams and employees, ethics

and perception of fairness, intentions of guests, performance metrics as well as

some stages of the RM process. The results thus confirmed partly the developed

theory based on the review of the literature. Finally, the results played the role of

indicators and were followed up by qualitative research with semi-structured

interviews. The most significant results were consequently used in the development

of semi-structured interview questions in order to provide a more comprehensive

understanding of the problematic.

In addition to this, the overall qualitative findings and discussion demonstrated that it

was again relatively complex to answer where THRM affects the RM process and

framework as effects of its adoption can be experienced differently. The adoption of

THRM may impact only an aspect of the RM process or of the RM framework

according to different outlooks. Moreover, the qualitative findings provided a more

detailed overview of the impacts of THRM on some stages of the RM process as well

as some synergistic elements of its framework. The qualitative findings consequently

re-tested and re-confirmed more exhaustively and in depth the developed the

hypothesis, as only parts of it was affected by the aforementioned adoption. Finally,

the findings provided a more comprehensive understanding of the aforementioned

impacts and allowed the present research to be more accurate in answering its

problematic and in meeting its aim and objectives.

In the light of the outcomes of this dissertation, THRM seems so important for hotels

because it is about selecting the most profitable business mix for the entire hotel

asset, tracking revenues by market segment while considering total expenditures per

guest and generating incremental demand in order to become as profitable as

possible (Orkin, 2003; Kimes, 2005; Noone et al., 2011). The outcomes also showed

that the adoption of THRM contributes to the evolution of the RM process which is

consequently considered more strategically, holistic and taking into account all

sources of revenues (Helsel et al., 2006). Those were also in phase with the fact that

the RM process is shifting from a tactical market driven pricing and inventory to a

more strategic and holistic RM process that puts the role of guests as synergistic

79

element of paramount importance (Kimes, 2011). A more holistic approach of

dynamic pricing, forecasting methods, guest-centric RM, metrics, teams, data, and

other strategies and tools have consequently been identified with the aforementioned

adoption and contribute to the enlargement of revenue managers’ responsibilities

(Kimes, 2011; Noone et al., 2011).

Both quantitative results and qualitative findings contributed to knowledge as a

research gap was identified and although THRM concurrently with the evolution of

RM seems to be of paramount importance in the hospitality industry, a significant

lack of academic and practitioner research in the field was identified. The quality of

the work is legitimised by the use of reliable and advanced research from both

academic and practitioners. The literature is consequently composed of only verified

and published academic articles and books as well as industry leaders’ insights with

practitioners’ manuals. In addition to this, the employment of mixed methods

represented a laborious and expecting task but however benefited to synergistic,

valid and reliable outcomes (Collis and Hussey, 2013). The hypothesis was

consequently confirmed two times with two different perspectives that seemed to

considerably contribute to knowledge.

5.2 Limitations of the Research Project

The first limitation of this research project can be seen in the development of the

RMSF (Diagram 1) which revealed itself as a less appropriate model to investigate

the perceptions of revenue managers on the problematic as only 11 respondents

shared the opinion that THRM impacts on the RM process after being introduced to

this model. It seemed however necessary to investigate the synergistic and

inseparable elements of the RMSF to the RM process as acknowledged in the

literature (Emksiz et al., 2006; Noone et al., 2011; RevenuePerDesing, 2012). This

was however compensated by introducing the Total RM Process (Diagram 6) to the

respondents which revealed itself as relevant in the investigation of the problematic

on the RM process. In addition to this, another limitation of this research project is

related to the self-administered survey which was answered by only 28 revenue

managers from various backgrounds which reduced the scale and detail of analysis.

In the light of this, due to the length restriction of this research project, the analysis of

the quantitative results per level of service has not been undertaken as well as the

segmented analysis of centralised and on-property revenue managers due to an

absence of patterns throughout the completion of the questionnaire. In addition to

80

this, the selection of interviewees encountered a limitation as it would have been

more accurate to select interviewees who experienced effects of THRM on their

revenue IT systems in order to entirely benefit from the qualitative research method.

In this regard, additional discrepancies were identified in the qualitative findings

which demonstrated that it was highly complex and ambiguous to answer to the

problematic. However, the overall study seemed to achieve its objectives and aim as

the impacts of the adoption of THRM on the RM process and synergistic elements of

its systemic framework were provided and discussed.

5.3 Future Research

Research in yield management was identified as scattered and to be falling behind

the practice in the field. In the light of this, the limitations of the research were

represented by an important lack of literature on THRM as most research has been

driven only on RM as the revenue optimisation of rooms only. Although THRM

concurrently with the evolution of RM seemed to be of paramount importance in the

area of hotel revenue optimisation, there is a significant lack of academic and

practitioner research. However, research was identified on specific aspects of THRM

such as revenue centres which were investigated separately. Therefore, as scholars

and practitioners did not explore the effect of the aforementioned adoption, this

research project has tended to fill the gap. In the light of this, research could

consider the implications of the impacts of the adoption of THRM on specific aspects

of the RM process and systemic framework. In addition to this, more research is

surely required on basic THRM principles, implementation, technologies,

performance metrics, related procedures, information and data, human resources

concerns, as well as the connection that was identified between THRM and guest-

centric RM. In addition to this, research could focus on the integration of all revenue

centres rather than only investigating revenue centres separately. There is also an

absence of studies that explore how to monetise THRM and what are the outcomes

of such an adoption. A focus on dynamic pricing seems also required as the

outcomes of this research project highlighted a potential future vision of “total

dynamic pricing”. Finally, research could be focusing on THRM forecasting

techniques due to its high degree of importance.

Finally, the fact that the developed hypothesis was mainly based on room RM

literature to support the discussion due to lack of research in THRM highlighted that

there will be much more to explore in the future.

81

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APPENDICES

Appendix 1: Academic Research Landscape of the RMSF elements

Source: Author

Academic Research Subject

Vinod (2004); Stuart-Hill and Parker

(2008)

Business and Marketing Basics of

Revenue Management

Okumus (2004); Lockyer (2007)

Implementing Revenue Management

Schwartz & Cohen (2004) ; Guadix,

Cortes, Onieva & Munuzuri (2010)

Revenue Management Technologies

and Revenue IT systems

Barth (2002); (Lieberman (2003) ;

Hoogenboom (2012)

Market and Operational Performance

Metrics for Revenue Management

Lieberman (2003); Vinod (2004); Emeksiz, et al., (2006); Tranter, et al.,

(2008) ; Guadix, et al., (2009); Hayes and Miller, (2011). Noone et al., (2011)

Revenue Management Procedures

Bodea, et al., (2009) Information requirements in Revenue

Management

Lieberman (2003); Mohsin (2008) ;

Tranter, et al., (2008) ; Selmi et al.,

(2011) ; Beck et al., (2011)

Revenue Teams and Required

Competencies

Noone, et al., (2003); Milla and

Shoemaker (2008); Wang and Bowie

(2009), Noone et al., (2011)

The Integration of Guest-centric

Revenue Management

Burgess and Bryant (2001); Rannou and Melli (2003) ; Jain and Bowman

(2005)

The Measurement of Revenue

Management Outcomes

Food and Beverage Bertsimas and Bryant (2001); Kimes and

Thompson (2004); Kimes (2005)

Revenue Sources

Spas Kimes and Singh (2009)

Function Space Kimes and McGuire (2001); Orkin, 2003)

Gambling facilities Kuyumcu, (2002); Hendler and Hendler

(2004)

Golf Rasekh and Li (2011)

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Appendix 2: Academic Research Landscape of RM Practices

Source: Author

Rate Management Practices

Collins and Parsa (2006); Shy (2008);

Hung et al., (2010)

General Pricing

Hanks et al., (2002); Kimes and Wirtz

(2003); Tranter et al., (2008); Shy (2008)

Rate Discrimination and Fences

Tranter et al., (2008); Palmer et al.,

(2008)

Dynamic Pricing

Noone and Mattila (2009) Rate Display

Pan (2007) Determining Optimum Prices

Carvell and Quan (2008) ; Demirciftci et

al., (2010)

Guarantees of Lowest Rates

Baker et al., (2002); Harewood (2006);

Guadix et al., (2010); El Gayar et al.,

(2011)

Allocating Optimum Prices to Rooms

Miscellaneous Practices

Choi and Kimes (2002); Tranter et al.,

(2008); Myung et al., (2009)

Management of Distribution Channels

Netessine and Shumsky (2002); Koide

and Ishii (2005); Ivanov (2006)

Overbooking Techniques

Pullman and Rogers (2010) Management of Capacity

Kimes and Chase (1998); Ismail (2002);

Vinod (2004)

Control of Stay Duration

Noone et al., (2003) Guarantees of Available Rooms

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Appendix 3: Ethical and Unethical Revenue Management Application

Source: Adapted from Kimes (2002)

Ethical Application Unethical Application

Offering guests all required details

concerning rates and reservation terms

(Transparence builds trust)

Low reductions on prices in returng for

less flexible cancellation terms

Significant reductions on prices in return for less flexible cancellation terms

Modifications in reservation conditions

without advising the guest Various rates for offerings discerned as

distinct such as Friday night stays (High

demand) and Sunday night stays (Low

demand), for instance.

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Appendix 4: Academic Research Landscape of the elements of RM Forecasts

Source: Adapted from Weatherford and Kimes (2003)

Academic Research Subject

General Research on Revenue Management Forecasts

Weatherford et al., (2001); Burger et al., (2001); Weatherford and Kimes (2003); Chen

and Kachani (2007); Tranter et al., (2008);

Forecast in Application

Law (2000); Chen and Kachani (2007);

Yuksel (2007); Lim and Chan (2011)

Demand Forecast

Forecast in Study

Weatherford and Kimes (2003); Chen and

Kachani (2007)

Advanced Reservation

Burger et al., (2001); Baker and Eister

(2001); Weatherford and Kimes (2003);

Yuksel (2007); Lim et al., (2009); Lim and

Chan (2011)

Historical Time Periods

97

Appendix 5: The Research “Onion”

Source: Saunders et al. (2009)

98

Appendix 6: Comparison of Four Research Philosophies in Management

Research

Source : Saunders et al. (2009)

99

Appendix 7: Major Difference between Deductive and Inductive Approaches to

Research

Source: Saunders et al. (2009)

100

Appendix 8: Quantitative Research Protocol

Source: Author

1. Proposal of instrument to research supervisor (June 2015)

2. Reflect on research supervisor and mentor feedback to adjust

the instrument design (June 2015)

3. Participant selection and revision of instrument (June 2015)

4. Construction and piloting of instrument on Google Form (June

- July 2015)

5. Quantitative analysis of results (July – August 2015)

101

Appendix 9: Survey proposed to 28 hotel revenue managers

The live version of this survey can be accessed online via:

https://docs.google.com/forms/d/1WspYLtkZMMruJsc5FKuduEegBX1ihfM3bXkcAp-

Undg/viewform?edit_requested=true

102

103

104

105

SUBMIT

Source: GoogleForms, (2015) and Author

106

Appendix 10: Semi-structured Interview Guide

SEMI-STRUCTURED INTERVIEW GUIDE

‘From Revenue Management to Revenue

Strategy: the effects of the adoption of Total

Hotel Revenue Management (THRM) on the

Revenue Management (RM) process and

synergistic elements of its systemic framework’

Thank you for agreeing to be involved in this research

project which is being conducted as part of my MSc

studies with Oxford Brookes University.

The participation in this semi-structured interview is absolutely anonymous and

answers will be employed with strict confidence. The information will not be used for

commercial purposes or shared with any third parties. The answers will be recorded

on paper to respect confidentiality and for personal analysis only.

INTRODUCTION AND SECTION 1

- Acknowledgements for the possibility of interview

- Discuss and sign confidentiality agreement for anonymity

- Establish timeframe

SECTION 2: REVENUE IT SYSTEMS

1/ How does THRM affects revenue IT systems?

a/ In terms of interface, recommendations, application?

2/ How does your revenue IT systems adopt THRM?

a/ In terms of integration, revenue centres, data?

SECTION 3: PERFORMANCE METRICS

1/ How does THRM affects performance metrics?

a/ In terms of application, measurement?

2/ Does performance metrics evolve with the adoption of THRM?

a/ In terms of importance and role, usage, analysis?

107

3/ Are performance metrics used for new purposes?

SECTION 4: TEAMS AND HUMAN RESOURCES CONCERNS

1/ How does THRM affects revenue managers and teams?

a/ In terms of coordination, competencies, communication?

2/ What are the implications of the adoption of THRM on teams and individuals?

a/ In terms of training, responsibilities and decisions?

3/ Does THRM affects the role of the revenue manager?

a/ evolution of the role, implications, influence?

SECTION 5: GUEST-CENTRIC REVENUE MANAGEMENT

1/ How does THRM affects guests?

a/ In terms of guest implications, ethics, willingness to pay, perception of fairness,

guest behaviours?

2/ What do you understand by guest-centric RM?

a/ Is it linked to the adoption of THRM?

b/ Does THRM initiates a more guest-centric focus?

c/ What is the role of the guest in THRM?

SECTION 6: STAGE 1 OF THE RM PROCESS: PREREQUISITES/MARKET

SEGMENTATION/PRICING

1/ How does THRM affects Stage 1 of Total RM Process (Introduce Diagram 6)?

a/ In terms of market segmentation, pricing, development of prerequisites?

2/ Does market segmentation evolves with the adoption of THRM?

3/ Does pricing implications become more holistic with the adoption of THRM?

a/ In terms of integration and practice overall revenue centres, strategies and

actions?

SECTION 7: STAGE 2 OF THE RM PROCESS: DEFINE OBJECTIVES/DATA

COLLECTION AND ANALYSIS

108


a/ In terms of integration of specific data, data anlysis, objectives adjustment?

2/ Do you consequently define objectives from a holistic outlook for all revenue

centres?

3/ Do you therefore new data and analysis concerning new revenue centres that are

optimised?

SECTION 8: STAGE 3 OF THE RM PROCESS: FORECAST


a/In terms of forecasting other revenue centres and required data for forecasts?

2/ How forecasts techniques such as advanced reservations and historical

techniques are affected by the adoption of THRM?

3/ Do you forecast demand for all of your revenue centres?

Source: Adapted from Cooper et al. (2006)

109

Appendix 11: Ethics in Quantitative and Qualitative Research

Prior to the conduct of this research project, an ethical form was submitted to the

Oxford Brookes University and the research project was granted ethical. The

objectives and aim of the study were explained clearly to both respondents and

interviewees during the piloting of the research instruments. The edition of a

confidentiality agreement was consequently sought to be proposed and signed by

both parties (Student and research subjects).

CONFIDENTIALITY AGREEMENT:

Confidentiality Agreement of Anonymity:

Description

Thank you for agreeing to be involved in this research project which is being

conducted as part of my MSc studies with Oxford Brookes University. The objective

of this research project is to provide further understanding on how the adoption of

Total Hotel Revenue Management (THRM) affects the Revenue Management (RM)

process as well as some inseparable elements of the RM framework.

Participation

Your participation in this research project involves completion answering questions

about the aforementioned objective and is voluntary. Your decision of whether to

participate or not does not impact upon your current or future relationship with

Oxford Brookes University. If you do agree to participate, you may withdraw from

participation during completion. Nevertheless, as the purpose of this agreement is

total anonymity, it is impossible to withdraw your answers once collected.

110

Benefits

It is expected that this research project might not be beneficial to you directly but it is

hoped that it will contribute to further knowledge and understanding amongst RM

academics and practitioners. A copy of the reserch project can be claimed to

Guillaume Genin, MSc student, at [email protected]

Confidentiality

All answers are entirely anonymous and will be processed confidentially. The names

and surnames of respondents are not required at any time during completion. The

results will be analysed only within the research project which will remain at Oxford

Brookes University, on both paper and digital formats. In this context, neither

respondents nor companies will be identified, and the level of information provided

about the answers will not allow identifications.

Consent for participation

The submission of the completed survey is accepted as an indication of your consent

to participate in this research project.

Enquiries about the research project

For further details or questions, please do not hesitate to contact Guillaume Genin,

MSc student at Oxford Brookes Univeristy, at [email protected] or on 0044 7448

603927.

Risks

No risks are involved within your participation in this research project.

DATE OF APPROVAL:

SIGNATURE OF SIGNATURE OF THE STUDENT:

THE RESEARCH SUBJECT:

Source: Adapted from Cooper et al. (2006)

111

Appendix 12: Quantified Results of the Surveys (28 responses)

Source: GoogleForms, (2015)

Graph 1

Graph 2

Graph 3

Graph 4

112


Graph 5

Graph 6

Graph 7

113


Graph 8

Graph 9

114

(The dark blue disk

represents elements of the

Revenue Management

framework that are

omnipresent during the

process.)


Graph 10

Graph 11

115

Sources: GoogleForms (2015)

Appendix 16: Notes of the semi-structured interviews (3 participants)

Graph 12

Graph 13

Graph 14

Graph 15

Graph 15

Documents

The adoption of THRM and its impacts on the business process