Field Experiments for Testing Revenue Strategies in the Hospitality Industry

Abstract

Field experimentation has been widely adopted as an optimization technique in product design and marketing in several industries. Companies have successfully used field experimentation to reduce costs, increase revenues, and maintain an edge in their customer experience in highly competitive environments. However, in certain quantitative applications, such as revenue management in hospitality, to the authors’ knowledge, there is little publicly documented work on experimentation, and its use remains the privilege of big corporate brands with a small market share. This article discusses the likely causes of the sparse adoption of field experimentation for revenue management in hospitality. It also outlines opportunities that field experimentation can bring to accommodation managers and describes specific types of experimental designs that can help exploit those opportunities. By explicitly addressing the complexities of revenue management, this article aims to start a conversation about experimentation in hospitality that should benefit the industry as a whole.