Revenue Management in Portugal: A Strategy to Compete

Introduction

Revenue Management (RM) known in the 1980s in USA initially was used on the airline industry. Only later it was applied on the hotel industry and the reasons are mostly related to the perishable characteristics inherent to its services: if a seat (airline sector) or a room (hotel sector) is not sold, the seat or room may never be resold (Littlewood, 2005). RM is a management tool that helps to sell the right product, to the right customer, at the right time, at the right price and through the right distribution channel (Kasavana & Brooks, 1998). RM started to be a widely used practice in the hotel industry, not only to optimize the revenues of accommodation, but also the revenues of other departments, among which appears the F&B, the Conference Rooms, the SPA and the Golf. Its objective is to obtain the highest profitability of all services (Costa, 2017).

As the tourism market is a phenomenon that shows itself in a continuous growth, the evolution and maturity of the current market changes demands the implementation of new concepts and practices for business optimization (Costa, 2017), as well as a continuous improvement service coupled with customer expectations (KPMG, 2018) The rivalries in this industry are huge and hotels need to use price management tools to go along with the growth of tourism (Costa, Monte & Fernandes, 2013), and this is only possible through the use of a strategic tool: the RM (Altin, Schwartz & Uysal, 2017).

In Portugal, RM is a poorly developed concept and organizations have a small number of specialized Revenue Managers (RMr). It has slowly been incorporated on the hotel industry and only recently it is perceived as a price management tool with lots of advantages. Few departments are strictly dedicated to this area and for this reason the used practices and their advantages are still unknown to a large part of the population. The present study aims to understand which the incorporation of RM in hotels is. It begins by understanding what benefits its implementation brings to the economy as well as to hotels. Then, RM orients to understand the need that hoteliers have on specific training in this area, highlights the importance of RM’ use in hotels and what are the used systems. This research is structured in three main chapters. In the first chapter, a theoretical framework is presented, through a literature review about RM. In the second chapter, a case study is presented, used methodology explained, analysis and discussion made. Finally, limitations and suggestions for futures research are presented, as well as conclusions.