The topic of the final work is "Development of Revenue Management in the Hospitality Industry". The paper is devided in two parts: theoretical and research work. In the theoretical part are listed definitions and a purpose of revenue management, their beginnings in the hotel business and their current role. The research work part was accomplished by interviewing two hotels on the island of Hvar, which is one of the most popular tourist destinations in Croatia. The paper sets up the hypothesis that revenue management is not put in practice at the island of Hvar. The first chapter discuss from yield management to total revenue management, bywriting about yield management in general and the beginning of revenue management. Following chapter is about hotel revenue management system, their concepts and elements. It is divided into three parts: how is revenue management used in a practice, key points of the revenue management and the hotel revenue management system. Afterwards, there has been discussed about revenue management instruments, with attention on management system and metrics in revenue management. Finally, it has been talked about the process of defining prices for certain services and the importance of forecasting in the hotel industry. Thesis has been completed with research and research results, which are based on the facts about two hotels and their comparison; how they implement revenue management in practice and their thinking about it. The results are presented with tables and graphs supplemented with suggestions for better progress.