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Revenue and attendance simultaneous optimization in performing arts organizations

Author

Listed:
  • Andrea Baldin

    (Copenhagen Business School)

  • Trine Bille

    (Copenhagen Business School)

  • Andrea Ellero

    (Ca’ Foscari University of Venice)

  • Daniela Favaretto

    (Ca’ Foscari University of Venice)

Abstract

Performing arts organizations are characterized by different objectives other than revenue. Even if, on the one hand, theaters aim to increase revenue from box office as a consequence of the systematic reduction in public funds; on the other hand, they pursue the objective to increase its attendance. A common practice by theaters is to provide incentives to customers to discriminate among themselves according to their reservation price, offering a schedule of different prices corresponding to different seats in the venue. In this context, price and allocation of the theater seating area is decision variables that allow theater managers to manage their two conflicting goals to be pursued. In this paper, we introduce a multi-objective optimization model that jointly considers pricing and seat allocation. The framework proposed integrates a choice model estimated by multinomial logit model and the demand forecast, taking into account the impact of heterogeneity among customer categories in both choice and demand. The proposed model is validated with booking data referring to the Royal Danish theater during the period 2010–2015.

Suggested Citation

  • Andrea Baldin & Trine Bille & Andrea Ellero & Daniela Favaretto, 2018. "Revenue and attendance simultaneous optimization in performing arts organizations," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(4), pages 677-700, November.
    • Handle: RePEc:kap:jculte:v:42:y:2018:i:4:d:10.1007_s10824-018-9323-7
    DOI: 10.1007/s10824-018-9323-7
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    Cited by:

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    3. Ozhegova, Alina & Ozhegov, Evgeniy M., 2020. "Segmentation of theatre audiences: A latent class approach for combined data," Journal of choice modelling, Elsevier, vol. 37(C).

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    More about this item

    Keywords

    Multi-objective optimization; Pricing; Seat allocation; Multinomial logit model; Theater demand;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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