Hotel dynamic pricing, stochastic demand and covid-19

Andrea Guizzardi; Luca Vincenzo Ballestra; Enzo D'Innocenzo

doi:10.1016/j.annals.2022.103495

Hotel dynamic pricing, stochastic demand and covid-19

Andrea Guizzardi^*
, Luca Vincenzo Ballestra
, Enzo D'Innocenzo

^*Corresponding author for this work

Econometrics and Data Science

Research output: Contribution to Journal › Article › Academic › peer-review

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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.

Original language	English
Article number	103495
Pages (from-to)	1-15
Number of pages	15
Journal	Annals of Tourism Research
Volume	97
Early online date	26 Oct 2022
DOIs	https://doi.org/10.1016/j.annals.2022.103495
Publication status	Published - Nov 2022

Bibliographical note

Publisher Copyright:
© 2022 Elsevier Ltd

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 3 Good Health and Well-being

Keywords

Intertemporal demand and supply
Inventory control
Last-minute price adjustment
Price kurtosis and asymmetry
Score-driven model
Stochastic seasonality pattern

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10.1016/j.annals.2022.103495

Hotel dynamic pricing, stochastic demand and covid-19Final published version, 1.32 MBLicence: Article 25fa Dutch Copyright Act

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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.",

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doi = "10.1016/j.annals.2022.103495",

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AU - Guizzardi, Andrea

AU - Ballestra, Luca Vincenzo

AU - D'Innocenzo, Enzo

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N2 - 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.

AB - 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.

KW - Intertemporal demand and supply

KW - Inventory control

KW - Last-minute price adjustment

KW - Price kurtosis and asymmetry

KW - Score-driven model

KW - Stochastic seasonality pattern

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Hotel dynamic pricing, stochastic demand and covid-19

Abstract

Bibliographical note

UN SDGs

Keywords

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