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Choice-Based Dynamic Pricing for Vacation Rentals

In this paper, we propose a new dynamic pricing approach for the vacation rental revenue management problem. The proposed approach is based on a conditional logistic regression that predicts the purchasing probability for rental units as a function of various factors, such as lead time, availability, property features, and market selling prices. In order to estimate the price sensitivity throughout the booking horizon, a rolling window technique is provided to smooth the impact over time and build a consistent estimation. We apply a nonlinear optimization algorithm to determine optimal prices to maximize the revenue, considering current demand, availability from both the rental company and its competitors, and the price sensitivity of the rental guest. A booking curve heuristic is used to align the booking pace with business targets and feed the adjustments back into the optimization routine. We illustrate the proposed approach by successfully applying it to the revenue management problem of Wyndham Destinations vacation rentals. Model performance is evaluated by pricing two regions within the Wyndham network for part of the 2018 vacation season, indicating revenue per unit growth of 3.5% and 5.2% (for the two regions) through model use.

Ketersediaan

Informasi Detail

Judul Seri

INFORMS JOURNAL ON APPLIED ANALYTICS; Vol.51 No.6 November-December 2021

No. Panggil

-

Penerbit

: .,

Deskripsi Fisik

p. 450 - 462

Bahasa

English

ISBN/ISSN

-

Klasifikasi

NONE

Tipe Isi

-

Tipe Media

-

Tipe Pembawa

-

Edisi

-

Subjek

DYNAMIC PRICING
REVENUE MANAGEMENT
NONLINEAR OPTIMIZATION
PRICE SENSITIVITY
VACATION RENTAL
CONDITIONAL LOGIT REGRESSION

Info Detail Spesifik

https://doi.org/10.1287/inte.2021.1075

Pernyataan Tanggungjawab

Yaping Wang, Kelly McGuire, Jeremy Terbush, Michael Towns, Chris K. Anderson

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