At this point, it is important to see whether the approaches and models of business administrators are consistent with the recommendations offered by scholars. On the whole, one can argue that there is no sharp discrepancy between theory and practice. The findings of this study indicate that the managers working in Saudi hotels attach much importance to different forms of segmentation, and this procedure significantly influences the pricing policies of these organizations. For example, according to the answers of the respondents, many hotels have six types of rooms that differ in terms of price. To a great extent, this approach is aimed at increasing the revenues as well as occupancy rates. One can argue that hospitality organizations in Riyadh choose to concentrate on individual business travelers and corporate clients. In contrast, the hotels located in Mecca pay attention to the needs of separate pilgrims, travel agents, as well as wholesalers. Certainly, these organizations serve clients who can have different needs and values. It is possible to say that these hotels avoid dividing clients into business or leisure travelers. Instead, they speak about corporate clients, governmental institutions, travel agencies, or airlines. This approach to the classification of customers can help to develop pricing strategies. To some extent, this strategy is supported by academic literature. For instance, one can look at the Harrah’s Cherokee case which shows that hospitality institutions should pay more attention to the spending patterns of clients and the degree of their loyalty to a hotel (Schuessler, 2011, p. 12). It is believed that these indicators can be more informative. This is one of the trends that can be identified.
It should be taken into consideration the respondents attempted to adopt this approach in their daily work. In particular, the participants pointed out that they provided discounts to those clients who continuously used the services of the hotels. For instance, one can speak about travel agencies that rely on the services of hotels. In contrast, individual leisure travelers are more likely to pay a higher price. One can argue that this approach to yield management is supported by scholars (Abdeighany & Abdelghany, 2009). Judging from the interviews that were carried out, one can argue that hotel managers choose to give discounts to people who preferred to stay for a longer period. These professionals have to reduce the price of a room, but at the same time, they can increase the revenues, for example, one can argue about the operations of restaurants or coffee shops. This approach is also discussed by scholars who study the work of hotels (Yeoman, McMahon-Beattie & Sutherland, 2001). Thus, the practices of these professionals are backed up by some evidence. The main rationale for this strategy is to increase the occupancy rate and profitability of hotels at a time when the level of demand is very low.
One of the main trends that can be identified is that researchers describe different approaches to segmentation. Many scholars believe that the needs of clients should be the main criterion for dividing the market into different groups. This task is critical for business administrators who have to offer services best suit clients. There are different approaches to this task; for instance, one can speak about the so-called geographic compensation. In this case, managers should focus on the place from which clients come (Smolyaninova, 2007). Nevertheless, this model is not widely adopted by practitioners since it cannot always provide accurate information about the preferences of clients. This is one of the issues that hotel managers should consider while taking decisions.
Apart from that, both practitioners and scholars set stress on price segmentation as one of the strategies for increasing the profitability of hotels. Overall, close attention should be paid to the needs of clients and their ability or willingness to pay because these criteria are vital for determining the choices that clients can make. The interviews that I have conducted as well academic literature indicate that hotels can maximize their revenues by adopting flexible pricing policies. In this way, they should attract people with different income levels. For instance, hotel managers are more likely to charge a higher price, if customers are concerned about the urgency of the schedule, the size of rooms, amenities, or booking dates (Stiving, 2011). These opportunities are of great importance to many prosperous clients. As a rule, these customers are allowed to enjoy more privileges while using the services of a hotel. In turn, people, who ask for price reductions, can be deprived of several advantages such as last-minute booking or the opportunity to change the schedule. In the opinion of practitioners, this approach is particularly beneficial when the major customers of a hotel are not homogeneous and when the level of demand fluctuates. This method is used by the managers who were interviewed for this study. This is one of the important trends that should not be overlooked by practitioners working in the hospitality industry.
Furthermore, researchers and hotel managers inevitably pay attention to the classification of clients. Very often professionals tend to divide potential clients into two major groups such as leisure and business travelers (Smolyaninova, 2007). It is often believed that these people have very different needs, values, and priorities. For example, some hotel managers can say that the customers, belonging to the first group, can pay more attention to food, beverages, or entertainment opportunities that can make their experiences more fulfilling. In contrast, business travelers are more concerned with amenities such as Wi-Fi connections or the ability to make a last-minute booking. To some degree, there are some differences between these customers. Nevertheless, this distinction cannot capture the complexity of clients’ behavior and their purchasing decisions. The main issue is that the preferences of these people can be very similar to one another, and conventional classifications may not be applicable. Again, one can refer to the Harrah’s Cherokee case because it shows that hotel managers should concentrate on such a criterion as the loyalty of clients since in this way, they can better develop the pricing policies (Schuessler, 2011, p. 12). For instance, some of the clients continuously use the services of a hotel. In contrast, some people do not visit hotels regularly (Schuessler, 2011, p. 15). Moreover, they do not distinguish a hotel from other hospitality organizations. This is one of the main points that should be taken into consideration. Furthermore, there are some customers whose potential value for companies cannot be accurately determined. As a rule, business administrators do not know much about the buying preferences of these people. These differences in the behavior of clients indicate that business administrators should design strategies that can retain loyal clients and attract new ones. So, in this case, it is not quite appropriate to divide them into tourists or business travelers. One should take into account that the strategies of hotel managers should pay attention to the long-term results of their policies. For instance, they need to think about the lifetime value of clients for the hotels. In this way, they can better ensure the profitability of their hotels. This is one of the main arguments that can be made. It is possible to argue that this issue is not overlooked by managers working in Saudi hotels. They realize that the loyalty of clients is vital for the long-term profitability of their organizations. Certainly, they do not always adhere to the models advocated by scholars, but their methods are consistent with the principles of yield management.
Overall, it is possible to make several important arguments. First of all, the managers of Saudi hotels attach great importance to corporate clients, airlines, wholesalers, travel agents, and so forth, because these clients are important for increasing the occupancy rates and increasing profitability. Apart from that, these professionals focus on price-segmentation because this policy helps them attract a great number of clients and maximize revenues. Additionally, these professionals do not overlook the value of customer loyalty since this criterion is important for increasing of profitability of hotels and their occupancy rates. To a large extent, the work of these professionals relies on theoretical assumptions about yield management. These are the main trends that can be identified from the results of the research and the review of the academic literature.
Abdeighany, A., & Abdelghany, K. (2009). Modeling Applications in the Airline Industry. New York: Ashgate Publishing.
Schuessler, S. (2011). Customer-Centric Revenue Management. New York: GRIN Verlag.
Smolyaninova, J. (2007). Hospitality Market Opportunities for the Business Market Segment in Borlange. Istanbul: Bournemouth University.
Stiving, M. (2011). Impact Pricing: Your Blueprint for Driving Profits. London: Entrepreneur Press.
Yeoman, I., McMahon-Beattie U., & Sutherland, R. (2001). Leisure revenue management. Journal of Leisure Property, 1(4), 306-317.