Revenue Management Capability and Host Professionalization Degree

Abstract

This study explores how a revenue management capability can be created by Airbnb hosts and the role played by the professionalization degree, defined as the number of listings managed by a host. The theoretical lenses used by this study is the resource-based. Based on previous studies on revenue management in the field of hospitality, a wide list of routines, skills, know-how and coordination mechanisms are considered to explain how the revenue management capability can be created by a host. In particular, the revenue management process can be segmented into four major components: i) identifying the required information to set the revenue management strategy, ii) taking strategic and then tactical pricing and revenue management decisions, iii) managing the communication and interaction with the guests, and iv) the availability of a software dedicated to revenue management. The study is based on qualitative data collected through interviews in the Milan destination. In line with previous studies, three different groups of hosts where identified: i) single hosts (also called group one), ii) hosts managing 3-5 listings (group two), iii) hosts managing more than 10 listings (group 3). The interviews were recorded, transcribed and coded using the software NVIVO. Results reports strong differences between the three groups of hosts and especially between single and big hosts (those managing ten or more listings). The goals itself are different: while single hosts prefer to select guest and maximize price, big hosts, supporting higher fixed costs, are strongly focused on revenue. All the four blocks are therefore managed in a different way. Small hosts are widely involved in the operating processes (check-in, cleaning, guest interaction) and in many cases the short-term rental is only an additional activity (the main work in another). Therefore, the time dedicated to data collection and revenue management strategy is limited. The opposite is for big hosts that are usually organized as a company with employees specialized per function and with a strong focus on revenue maximization. The paper is supportive for the emerging idea of professionalization degree. The study traces theoretical as well as practical conclusions. The main study limitations are listed.