An investigation into the Relationship between Revenue Management Practices and Financial Performance in Star-Rated Hotels in Sri Lanka

Abstract

Purpose: The purpose of this study is to examine the Relationship between Revenue Management Practices and Financial Performance in Star-Rated Hotels in Sri Lanka. Method: A quantitative research design was employed, utilizing a cross-sectional approach to collect data at a specific point in time. The sample was selected using stratified random sampling to ensure representation across hotels. Data was gathered through structured questionnaires and supplemented with secondary data from financial reports and industry publications. Results and Conclusions: The study revealed that 40.9% of surveyed hotels had fully implemented revenue management procedures, emphasizing their strategic importance. Significant positive correlations were found between revenue management practices and financial performance indicators, including ADR, occupancy rate, RevPAR, GOPPAR, and return on investment. Effective revenue management practices were shown to enhance competitive advantage and market differentiation. Regression analyses further highlighted the substantial impact of "Revenue per Available Room" on return on investment, underlining the importance of optimizing this metric. The research underscores the strategic importance of revenue management practices in the hospitality industry and their positive influence on financial performance. Research Implications: Hoteliers should consider these findings when formulating strategies to remain competitive and financially viable. Effective revenue management contributes to enhancing competitive advantage and market positioning. Originality/Value: Study provides insights into the pivotal role of revenue management practices in shaping the financial performance of star-rated hotels in Sri Lanka. Ethical considerations were a cornerstone of this study, ensuring the well-being and rights of participants and setting a high standard for future research in the field.