Revenue Management: A Toy for the Big Players, or a Necessity Even for Small Guesthouses?

Do you feel that sophisticated revenue management is the exclusive domain of international chains with an army of analysts? The reality is more complicated. While mid-sized hotels have already discovered the magic of revenue management, the smallest ones are still leaving money in their customers’ pockets and bank accounts. What factors are essential for implementing revenue management in business practice?

Size (unfortunately) matters

Revenue management has become the standard in the hotel industry for optimizing gross operating profit (GOP). The principle of selling “the right room to the right guest at the right time for the right price” sounds simple, but its implementation in small and medium-sized enterprises (SMEs) often faces obstacles.

Kocourek, Chalupa, and Petříček (2025) focused specifically on this segment of the lodging industry and, based on the MERMI (Model for Evaluating Revenue Management Implementation)—developed by academics from Spain who conducted a detailed review of both published studies and the strategies of accommodation providers themselves—they surveyed Czech hoteliers. Are the results surprising? First, let’s look at the basic definition of the entire issue, which is often much more complex than it seems.

What do scientific studies say?

Let’s examine current trends in revenue management research. Topics such as the automation of revenue management activities using artificial intelligence and machine learning tools, dynamic pricing strategies and tactics, and total revenue management based on a comprehensive view of the accommodation facility—rather than just revenue from lodging services—are widely discussed. Similarly, topics related to new technologies that streamline revenue management processes and support upselling and cross-selling are also prominent.

There are so many current topics within revenue management that it is very difficult even for academics to cover them comprehensively—let alone for small hoteliers to fully understand them all. An example is the study by Ivanov, Del Chiappa, & Heyes (2021), who describe this problem. On the one hand, we are able to examine individual aspects of revenue management in detail using sophisticated statistical methods; on the other hand, we lack the basic practical knowledge needed to implement revenue management in day-to-day operations. Many hoteliers therefore find themselves in a situation where they’d rather focus on day-to-day operations than on long-term strategy. “It’s always been this way, and it’ll stay that way!”

However, if we look not only at scientific studies but also at case studies of the market’s largest players, we can confidently state that it really does work. The level of revenue management implementation is directly linked to the overall performance of an accommodation facility. Indirectly, it is also linked to the satisfaction of guests, staff, and other stakeholders.

Why Are Small Hotels Falling Behind?

The research by the aforementioned authors revealed several key findings—though perhaps unsurprising to some—that define the current state of the Czech hotel industry.

• Nearly 39% of the hoteliers surveyed did not complete the comprehensive survey because they stated that they do not apply revenue management at all. These are predominantly the smallest establishments, which operate based on fixed price lists and intuition.
• Medium-sized hotels show a significantly higher rate of adoption of revenue management (RM) tools and engage in data-driven decision-making much more frequently than small hotels.
• The smaller the hotel, the more its owners perceive revenue management as an overly complex and time-consuming process. They lack both specialized staff and automated tools that would make their work easier.
• Small hotels often lack a defined strategy that accounts for declined requests, cancellations, no-shows, and walk-ins.
• Comparisons with competitors are only general, without the implementation of metrics such as ARI, MPI, and GRI.
• There is a lack of detailed knowledge of customer segments.
• They do not utilize overbooking or dynamic pricing.

Conclusion: The Way Forward for Small Hotels

The study’s findings serve as both a clear warning and a challenge. If you run a small guesthouse or boutique hotel, relying solely on “business instinct” is no longer enough in the digital age. Thanks to better data management, competitors from the mid-range segment can easily poach your customers during slower periods or maximize their profits during peak seasons.

The solution isn’t to implement corporate systems costing millions, but to start small—monitor the competition, dynamically adjust prices at least on a weekly basis, and don’t be afraid of technology. As both the literature and real-world experience show, the barrier isn’t the inability to use RM, but the willingness to change one’s mindset.