Optimal Overbooking Limits for a Hotel with Three Room Types and with Upgrade and dOwngrade Constraints

Stanislav Ivanov

Tourism Economics, 2015, vol. 21, issue 1, 223-240

Abstract: This paper develops a mathematical model for optimal overbooking limits for a three-room-type hotel. It is assumed that the hotel has low-, medium- and high-price rooms, and that upgrades and downgrades are possible but in one step only; that is, low-price rooms can be upgraded only to medium-price ones, high-price rooms can be downgraded to medium-price only, while medium-price rooms can be both downgraded to low-priced and upgraded to high-price. The optimal level of overbookings for each room type is calculated with the help of the expected marginal revenue technique. The paper identifies all possible combinations between the overbooking levels of each room type and the actual number of cancellations, no shows and early departures the hotel can face, and formulates the costs of the overbookings in each of these combinations.

Keywords: overbooking; revenue management; upgrade constraints; downgrade constraints; expected marginal revenue (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://journals.sagepub.com/doi/10.5367/te.2014.0444 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:21:y:2015:i:1:p:223-240

DOI: 10.5367/te.2014.0444

Access Statistics for this article

More articles in Tourism Economics
Bibliographic data for series maintained by SAGE Publications ().