Bayesian Pricing, Frequentist Volume Control: A Dual Epistemology Framework for Hotel Revenue Management

Bayesian Pricing, Frequentist Volume Control: A Dual Epistemology Framework for Hotel Revenue Management | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Bayesian Pricing, Frequentist Volume Control: A Dual Epistemology Framework for Hotel Revenue Management Xuan Tran This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-8811492/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 6 You are reading this latest preprint version Abstract This study challenges the foundational assumption in hotel revenue management that pricing and occupancy represent parallel managerial levers subject to similar optimization approaches. Using thirty-five years (1990–2024) of U.S. hotel performance data encompassing 38,695 properties, we demonstrate through structural equation modeling that pricing and occupancy follow fundamentally different epistemological processes. Pricing exhibits perfect Bayesian structure (β = 1.00, error variance 0.02), where revenue managers discover equilibrium rates determined by macroeconomic purchasing power beyond their control. Conversely, occupancy follows frequentist logic with 99% controllable variance (error variance 144.08), where managers create outcomes through cultural programming interventions operating independently of economic cycles. This 33,000-fold controllability asymmetry suggests the profession systematically misallocates resources: managers spend 90% of effort optimizing pricing (controlling only 0.003% of variance) while neglecting occupancy cultivation (offering 99% controllable variance). Strategic complementarities generate 2.5× amplification effects when coordinating Bayesian rate-setting with frequentist volume cultivation. Properties implementing our three-phase framework—accepting Bayesian pricing optimality, launching frequentist experiments, scaling successful interventions—achieve 8–12% RevPAR gains within twenty-four months. These findings provide actionable resource reallocation guidance transforming revenue management from forecasting-dominant toward experience-creation competency. Revenue management hotel performance pricing optimization demand management Bayesian methods experiential value Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Under Review Version 1 posted Reviews received at journal 05 May, 2026 Reviewers agreed at journal 03 May, 2026 Reviewers invited by journal 24 Feb, 2026 Editor assigned by journal 16 Feb, 2026 Submission checks completed at journal 16 Feb, 2026 First submitted to journal 06 Feb, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-8811492","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":597195018,"identity":"3ea084a8-29dd-4e64-b328-628df9153e30","order_by":0,"name":"Xuan Tran","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAAqUlEQVRIiWNgGAWjYNCCCgYG9gYGBgniVLOBiDMMDDwHSNLC2EaKFoP7vQ8/F847nNjDwHzwNg8xWiTb2I2lZ24DaWFLtiZKCz8bG4M077bDufsZeMykidLCxsbG/Jt3zuHcHgb+b8RpAdrCJs3bANLCw0acFsm2NDZrnmPp9T3MbMaWc4jRYnD4GPNtnhprYx725oc33hCjBQGYSVM+CkbBKBgFowAfAABSeybSzZaRGwAAAABJRU5ErkJggg==","orcid":"","institution":"University of West Florida","correspondingAuthor":true,"prefix":"","firstName":"Xuan","middleName":"","lastName":"Tran","suffix":""}],"badges":[],"createdAt":"2026-02-07 01:38:14","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-8811492/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-8811492/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":103516840,"identity":"541b770e-da43-4aeb-93ab-b2fe057c5aaf","added_by":"auto","created_at":"2026-02-26 14:30:09","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":452754,"visible":true,"origin":"","legend":"","description":"","filename":"Anonymizedmanuscript.pdf","url":"https://assets-eu.researchsquare.com/files/rs-8811492/v1_covered_5715e901-9a20-445d-9a24-41c9f80133b9.pdf"}],"financialInterests":"No competing interests reported.","formattedTitle":"Bayesian Pricing, Frequentist Volume Control: A Dual Epistemology Framework for Hotel Revenue Management","fulltext":[],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":false,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":false,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":true,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":true,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"journal-of-revenue-and-pricing-management","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":false,"externalIdentity":"","sideBox":"Learn more about [Journal of Revenue and Pricing Management](https://www.palgrave.com/gp/journal/41272)","snPcode":"41272","submissionUrl":"https://submission.springernature.com/new-submission/41272/3","title":"Journal of Revenue and Pricing Management","twitterHandle":"","acdcEnabled":true,"dfaEnabled":true,"editorialSystem":"stoa","reportingPortfolio":"Springer SNAPPs","inReviewEnabled":true,"inReviewRevisionsEnabled":false},"keywords":"Revenue management, hotel performance, pricing optimization, demand management, Bayesian methods, experiential value","lastPublishedDoi":"10.21203/rs.3.rs-8811492/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-8811492/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis study challenges the foundational assumption in hotel revenue management that pricing and occupancy represent parallel managerial levers subject to similar optimization approaches. Using thirty-five years (1990\u0026ndash;2024) of U.S. hotel performance data encompassing 38,695 properties, we demonstrate through structural equation modeling that pricing and occupancy follow fundamentally different epistemological processes. Pricing exhibits perfect Bayesian structure (β\u0026thinsp;=\u0026thinsp;1.00, error variance 0.02), where revenue managers discover equilibrium rates determined by macroeconomic purchasing power beyond their control. Conversely, occupancy follows frequentist logic with 99% controllable variance (error variance 144.08), where managers create outcomes through cultural programming interventions operating independently of economic cycles. This 33,000-fold controllability asymmetry suggests the profession systematically misallocates resources: managers spend 90% of effort optimizing pricing (controlling only 0.003% of variance) while neglecting occupancy cultivation (offering 99% controllable variance). Strategic complementarities generate 2.5\u0026times; amplification effects when coordinating Bayesian rate-setting with frequentist volume cultivation. Properties implementing our three-phase framework\u0026mdash;accepting Bayesian pricing optimality, launching frequentist experiments, scaling successful interventions\u0026mdash;achieve 8\u0026ndash;12% RevPAR gains within twenty-four months. 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