Digital transformation and revenue management: Evidence from the hotel industry

TLDR

The lodging industry increasingly relies on technology to maximize revenues and protect market share against traditional competitors and disruptive models such as Airbnb, yet the extent of technology adoption in revenue management, its benefits and barriers, and its impact on the future of revenue managers remain unclear. The study aims to examine how hotels use technology to maximize revenues and safeguard market share against competitors and disruptive platforms. The authors conducted 23 semistructured interviews with revenue managers in luxury and upscale Jordanian hotels to evaluate the sophistication of digital transformation in revenue management. Digital transformation in revenue management saves time, supports decision‑making, and boosts revenue, but high software costs are a key barrier and automation of manual heuristics is limited, indicating the profession is unlikely to be threatened.

Abstract

To maximize their revenues and protect their market share against traditional competitors (e.g. formal lodging businesses) and disruptive business models (e.g. Airbnb), the lodging industry increasingly relies on technology in various operations. However, the extent to which hotels adopt technology innovation in their revenue management (RM) operations, as well as the benefits of and barriers for digitalization, remains unclear. Moreover, the possible impacts of digital transformation on the future of revenue managers’ professions have been largely overlooked in previous studies. Drawing on qualitative data collected through 23 semistructured interviews with revenue managers in luxury and upscale hotels across Jordan, the findings suggest that RM is going through digital transformation with different levels of sophistication. While acknowledging the benefits of digital transformation in saving time, supporting the decision-making process, and yielding more revenues, the high cost of RM software emerges as a key barrier for digital transformation. The findings also reveal that the automation of various manual heuristics in RM is far from being possible, and therefore, digital transformation is unlikely to pose a threat to the future of the RM profession.