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The use of yield management within the kingdom of Saudi Arabia hotels

The airline industry has successfully adopted yield management (YM), particularly after the industry was deregulated in the late 1970s. In this study, YM is applicable to the hotel industry as a strategy to maximise profits. Thus, it involves the allocation of resources among various customers in hotel rooms relative to the existing market characteristics. In doing so, YM’s core concept is the provision of the right service to customers at the right prices. The aim of this study is to examine the practices and perceptions concerning YM as per the understanding and awareness of hotel managers. The study investigates several Saudi hotels of various sizes that use YM, and it identifies revenue management strategies and general practices within the hotel industry. The investigation took place in seven key areas of the hotel industry: location, occupancy, pricing strategy, price-adjustment strategies, HR management, customer satisfaction and third-party websites. The study involved two steps to achieve its purpose. First, YM practices were investigated in comparison to the seven key areas that influence revenue. Moreover, there was an emphasis on determining whether there was an attempt to manage revenue within the hotel industry. The results from the investigation are presented using a descriptive approach. The second step involved establishing the use of YM as a tool for managing revenue in hotel operations. This shows how revenue management through YM should be conducted. These results are presented using a normative approach. In the methodology, qualitative research is applied. Through this approach, 13 revenue managers and seven general managers from various Saudi hotels in Riyadh, the Eastern Province and Mecca were interviewed. Further, documents and direct observations were used to collect vital data to compare room rates through the use of direct and indirect distribution channels. Here, direct distribution channels involve making direct calls to hotels, as well as the use of official hotel websites. Conversely, indirect distribution channels involve the use of Booking.com and Agoda.com. These different options were then compared to observe the option that was more efficient in revenue management. From the comparison, the results showed that the practices and perceptions of YM were reasonable in the cities’ hotels. Of particular interest was the fact that respondents were aware of some key principles of YM. Consequently, many of these principles had been adhered to in room revenue management. For instance, stakeholders understood the significance of segmenting potential and current customers into various groups. This is critical, as these groups have different priorities, income levels and goals. As a rule, attention focuses on criteria such as ability and willingness to pay. The study recommends strategies that can be adopted by Saudi hotels to overcome the misconceptions and perceptions of YM. For instance, the system must be interlinked with location, occupancy, pricing strategy, price-adjustment strategy, HR, customer relations and the Internet. Interlinking the system with these key concepts is essential to maximise profits in the hotel industry. In essence, this paper offers knowledge to further the research on the applicability of the YM concept within the hotel industry in Saudi Arabia.
Type of thesis
Alrumaihi, R. (2013). The use of yield management within the kingdom of Saudi Arabia hotels (Thesis, Master of Management Studies (MMS)). University of Waikato, Hamilton, New Zealand. Retrieved from https://hdl.handle.net/10289/7843
University of Waikato
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