Hotel Management through Demand & Supply Adjustment by Pricing Strategies: Revenue Management & Dual Pricing

Abstract

Lodging industry plays a significant role in Japan’s goal of becoming a tourism-oriented nation. This is evident from data by the Japan Tourism Agency showing that accommodation costs account for just over 30% of the travel expenditure of foreign visitors to this country.

However, accommodation facilities have finite capacities; they cannot indefinitely accommodate a continuously rising number of guests. Consequently, for service-based products sharing these characteristics, it has become common practice to adjust prices in response to demand fluctuations.

The objective of this study is to focus on revenue management—a distinctive pricing strategy within the lodging industry—and to outline its characteristics.