Revenue management: A brief history and why you pay what you do

Before I became a full-time travel writer, I was in the hotel business. At that time, in the early 1970s in San Diego, revenue management wasn’t even a phrase, much less a concept or coveted position in an organizational chart. In its primitive state, it was a loose practice.

In summer how we loved the people from Arizona! Then there were weekends and special events (anyone remember the Cool Jazz Festival?). Sometimes minimum stays were even required over holidays. When more tourists visited, a hotel would simply raise room rates. Wow! Someone early in the history of economic theory called it “supply and demand.”

Then about 15 years ago or so, some suit dreamed up the position of “Revenue Manager.” Usually, the front desk or reservations manager was given this job/title which, of course, they’d already been doing. Introducing a revenue manager to a guest is like saying, “Hi, here’s the person who is going to squeeze every penny out of you.” It makes me all warm and fuzzy. Now sophisticated software programs continually determine rates.

I recently heard one of the best revenue management stories ever. I was visiting Sorensen’s Resort in Hope Valley to write a travel feature. It’s a quintessential mountain getaway: cabins, hiking, gorgeous views, etc.

The owner (since the early ’80s) told me that the previous proprietor had his own unique way to determine nightly room rates. He would watch as cars drove onto the property and charge according to the model. Guess who paid more, the Chevy or the Caddy? That’s really imaginative, old school revenue management.

For the traveler, the key to saving money is by traveling in off or shoulder seasons when hotels aren’t busy. Who knows, maybe even drive up in a jalopy.

Enjoy the journey…



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Howard Hian

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