Production and Operations Management 2003

THE BENEFITS OF OPTIMIZING PRICES TO MANAGE DEMAND IN HOTEL REVENUE MANAGEMENT SYSTEMS

TIMOTHY K. BAKER^1,2,3; David Collier^4,5,6

¹ Washington State University Tri-Cities · ² Baker Engineering (United States) · ³ Washington State University · ⁴ Fisher College · ⁵ Research Management (Norway) · ⁶ The Ohio State University

Abstract

We investigate the revenue impact of a new Price Setting Method (PSM) and compare it with the industry standard Bid Price Method (BPM). This comparison is performed via a simulation that was validated by a major hotel chain. In 27 out of the 32 cases, the PSM outperformed the BPM based on statistically significant tests. The PSM produces an average revenue increase of 34%, which can be thought of as an upper bound on the realistic revenue increase.

DOI

10.1111/j.1937-5956.2003.tb00217.x

Sources

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APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓