Hotel dynamic pricing, stochastic demand and covid-19

Andrea Guizzardi, Luca Vincenzo Ballestra and Enzo D'Innocenzo

Annals of Tourism Research, 2022, vol. 97, issue C

Abstract: We develop an innovative framework to study how hoteliers apply inventory control and price discrimination taking into account seasonality. We end up with a time-varying model that, using publicly available information, connects the early booking and last-minute pricing decisions. In doing so, we account for the expected demand size and price elasticity, the inventory put on sales, and the last-minute demand shocks. An analysis focused on 100 hotels in Milan (Italy) shows that during the Covid-19 last-minute discounts/surcharges remain stable over long periods while the role of advance booking as a lever for revenue management is reduced. Moreover, the pandemic has increased the last-minute adjustment at the short advance booking, especially for midweek days.

Keywords: Stochastic seasonality pattern; Last-minute price adjustment; Intertemporal demand and supply; Inventory control; Price kurtosis and asymmetry; Score-driven model (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:anture:v:97:y:2022:i:c:s0160738322001463

DOI: 10.1016/j.annals.2022.103495

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