Model of Price Optimization as a Part of Hotel Revenue Management—Stochastic Approach

Martin Petricek, Stepan Chalupa and David Melas
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Martin Petricek: Department of Economy and Economics, Institute of Hospitality Management in Prague, 181 00 Prague, Czech Republic
Stepan Chalupa: Department of Economy and Economics, Institute of Hospitality Management in Prague, 181 00 Prague, Czech Republic
David Melas: Department of Economy and Economics, Institute of Hospitality Management in Prague, 181 00 Prague, Czech Republic

Mathematics, 2021, vol. 9, issue 13, 1-16

Abstract: The paper is focusing on the problem of price optimization in the area of accommodation services. The main aim is to propose a novel simulation-based methodology of price optimization based on the customer’s price acceptance. The authors create a model based on the known approaches but extended by the stochastic approach and optimization based on the coefficient of price elasticity. The whole model is created, the price is set and optimized in two steps. The first step makes segmentation and optimization (with the price elasticity approach). The second step then sets the price of the reservation—the final price for a customer. This reservation price is mainly determined by knowledge of the length of stay, occupancy and booking lead time. All those parameters are described in the text from the economic point of view and make the base for the whole and complex revenue management model.

Keywords: accommodation service; nonlinear programming; price optimization; revenue management; price elasticity (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jmathe:v:9:y:2021:i:13:p:1552-:d:587021

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