One for all and all for one, a comparison of everyday low pricing and yield management strategies in the hotel industry

As a consequence of the deregulation of the US airline industry in the 1970s, Yield Management was developed as a management tool for enhancing profit and maintaining competitive advantage. To date, it has gained widespread adoption in a number of service industries where it assists the manager to profitably match variable demand with fixed capacity. However, while yield management practices have been linked with increasing levels of profitability, many service industries have profitably pursued a seemingly opposite strategy of one basic, no-frills product offer for all. This paper examines the factors that encourage some service organisations to utilise yield management techniques whilst others resort to offering low cost, no frills pricing approaches. Exploratory research of a sample of UK hotels demonstrates that whilst uniform pricing is indeed likely to be associated with a low price position, no evidence was found that yield management approaches to pricing are likely to be associated with simple service offers or organisations that only target a small number of market segments.