Dynamic and Differential Pricing Strategies for Revenue Management Problems

AbstractWe study the welfare impact of revenue management, a practice which is widely spread in the transport industry, but whose impact on consumer surplus remains unclear. We develop a theoretical model of revenue management allowing for heterogeneity in product characteristics, capacity constraints, consumer preferences, and probabilities of arrival. We also introduce dynamic competition between revenue managers. We solve this model computationally and recover the optimal pricing strategies. We find that revenue management is generally welfare enhancing as it raises the number of sales.

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Understanding the relationship between price, revenue management controls and scheduled capacity – A price balance statistic for optimizing pricing strategies

Journal of Revenue and Pricing Management ◽

10.1057/rpm.2010.18 ◽

2010 ◽

Vol 9 (4) ◽

pp. 356-373 ◽

Cited By ~ 7

Author(s):

Timothy L Jacobs ◽

Richard Ratliff ◽

Barry C Smith

Keyword(s):

Revenue Management ◽

Pricing Strategies ◽

Management Controls ◽

The Relationship

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Evaluating the impact of mega-sporting events on hotel pricing strategies: the case of the 2014 FIFA World Cup

Tourism Review ◽

10.1108/tr-02-2017-0018 ◽

2017 ◽

Vol 72 (2) ◽

pp. 184-208 ◽

Cited By ~ 6

Author(s):

Albert A. Barreda ◽

Sandra Zubieta ◽

Han Chen ◽

Marina Cassilha ◽

Yoshimasa Kageyama

Keyword(s):

Revenue Management ◽

Sporting Events ◽

Pricing Strategies ◽

World Cup ◽

Fifa World Cup ◽

Content Type ◽

Country Level ◽

Sporting Event ◽

Hotel Performance ◽

The Impact

PurposeThis study aims to examine the impact of a mega-sporting event “2014 FIFA World Cup” on hotel pricing strategies and performance. Design/methodology/approachThe present project examines the host regions’ response to the 2014 FIFA World Cup which was established by the variance in the main hotel key performance indexes: occupancy, average daily rate, revenue per available room (RevPAR) and supply. Using data gathered from STR, this research distinctly shows how the Brazilian host regions reacted to the World Cup. FindingsResults suggest that the key performance indicators of Brazil’s lodging sector reacted differently to the World Cup. Although all hosting cities experienced significant RevPAR growth because of the increase in hotel room rates during the event, the supply and occupancy performed differed from each city. Research limitations/implicationsResearch is limited to the case of hotel performance at the country level for mega-events. The study focused on the reaction of revenue managers in the Latin America context. Other contexts may generate different results. Practical implicationsThe study helps revenue managers to examine how the FIFA World Cup travel demand affected pricing strategies and revenue management practices in the Brazilian hotel sector in areas undergoing seasonal growths in overnight tourism. This study serves to inform hoteliers and practitioners about revenue management pricing strategies to improve hotel performance during mega-sporting events. Social implicationsThis study reveals that the benefits brought by a mega-event are not always translated into strong hotel revenue performance. This study highlights an important but understudied research area of revenue management pricing strategies and the effect of mega-sporting events in the hotel sector. This study contributes to the literature as one of the few investigations to benefit hotel pricing strategies and overall revenue performance. Originality/valueThis study is one of the few studies about exploring the reaction of revenue managers during the execution of a mega-sporting event. The value of the present study lies in the fact that the authors extend previous studies examining the impact of the most important sporting event in the hotel industry at the country-level perspective. This study serves to inform hoteliers and practitioners about revenue management pricing strategies to improve hotel performance during mega-sporting events.

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