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Optimal market segmentation of hotel rooms--the non-linear case

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  • Ladany, S. P.

Abstract

The optimal market segmentation pricing strategy for rooms of hotels is investigated to determine the optimal number of segments to be used and the accompanying number of rooms and price prevailing in each segment, under the assumption of an aggregate non-linear demand function. A single state-variable dynamic programming model is formulated to maximize profit, and an efficient reduction in the range of search for the solution of the model is outlined. A numerical example is provided for a 400 room hotel with an exponential demand curve.

Suggested Citation

  • Ladany, S. P., 1996. "Optimal market segmentation of hotel rooms--the non-linear case," Omega, Elsevier, vol. 24(1), pages 29-36, February.
    • Handle: RePEc:eee:jomega:v:24:y:1996:i:1:p:29-36
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    References listed on IDEAS

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    Cited by:

    1. Nadia El-Nemr & Béatrice Canel-Depitre & Atour Taghipour, 2017. "Determinants Of Hotel Room Rates," Post-Print hal-02332636, HAL.
    2. Vlachos, Ilias & Bogdanovic, Aleksandra, 2013. "Lean thinking in the European hotel industry," Tourism Management, Elsevier, vol. 36(C), pages 354-363.
    3. Guo, Xiaolong & Dong, Yufeng & Ling, Liuyi, 2016. "Customer perspective on overbooking: The failure of customers to enjoy their reserved services, accidental or intended?," Journal of Air Transport Management, Elsevier, vol. 53(C), pages 65-72.
    4. Xiaolong Guo & Ben Li & Yan Liu & Liang Liang, 2017. "Eliminating the Inconvenience of Carrying: Optimal Pricing of Delivery Service for Retailers," Service Science, INFORMS, vol. 9(3), pages 181-191, September.
    5. Salvietti, Luciano & Smith, Neale R., 2008. "A profit-maximizing economic lot scheduling problem with price optimization," European Journal of Operational Research, Elsevier, vol. 184(3), pages 900-914, February.
    6. Yufeng Dong & Liuyi Ling, 2015. "Hotel Overbooking and Cooperation with Third-Party Websites," Sustainability, MDPI, vol. 7(9), pages 1-17, August.
    7. Oleg Shcherbina & Elena Shembeleva, 2014. "Modeling recreational systems using optimization techniques and information technologies," Annals of Operations Research, Springer, vol. 221(1), pages 309-329, October.
    8. Ming Xu & Yan Jiao & Xiaoming Li & Qingfeng Cao & Xiaoyang Wang, 2015. "A Multi-Period Optimization Model for Service Providers Using Online Reservation Systems: An Application to Hotels," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-18, July.
    9. Banerjee, Pradeep K. & Turner, T. Rolf, 2012. "A flexible model for the pricing of perishable assets," Omega, Elsevier, vol. 40(5), pages 533-540.

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