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Hotel dynamic pricing, stochastic demand and covid-19

Author

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  • Guizzardi, Andrea
  • Ballestra, Luca Vincenzo
  • D'Innocenzo, Enzo

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.

Suggested Citation

  • Guizzardi, Andrea & Ballestra, Luca Vincenzo & D'Innocenzo, Enzo, 2022. "Hotel dynamic pricing, stochastic demand and covid-19," Annals of Tourism Research, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:anture:v:97:y:2022:i:c:s0160738322001463
    DOI: 10.1016/j.annals.2022.103495
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