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Business and Management.
Yield management in hotels has been described as a method of profitably managing fixed room capacity. A critical element of yield management is the decision strategy employed, as this determines the degree to which optimum financial solutions are generated. Recent research has indicated that the use of technology assisted decision optimising models, specifically the management science model of decision making, would greatly improve decision optimisation, by minimising the need to employ guesswork in achieving financial goals. However, despite this assurance, yield management remains couched in uncertainty through being inextricably associated with forecasting future demand for a perishable product in an increasingly volatile and competitive environment. The consequential pressures on decision-makers have afforded the opportunity for human idiosyncrasies to play a significant role in the decision-making process. The primary objective of this paper is, therefore, to gain an insight into how decisions are constructed in the yield management environment of Dublin hotels. The study reviews current literature on management science as a decision-making option. It also assesses heuristics and biases associated with decision-making, and their influence on rational decision protocol. The methodology employed phenomenological and hermeneutical techniques, with discourse analysis, in accessing and analysing data. The research findings reveal that within Dublin hotels, the management science model of decision-making has been sidelined in favour of decision strategies, wherein “human intervention” plays a more significant role. The findings also suggest that this “human intervention” has subconsciously facilitated an environment for decision-makers to fall into psychological traps, with the potential to make systematically biased errors, through satisfaction of ego needs and rationalising the irrational.
Kiely, T. (2008), Revenue Maximisation; An Examination of the Influences of Heuristics and Biases on the Yield Management Decision Process in Dublin Hotels (working paper), TTRA Conference, 2008, Helsinki, Finland