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Booking horizon forecasting with dynamic updating: A case study of hotel reservation data

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  • Haensel, Alwin
  • Koole, Ger

Abstract

A highly accurate demand forecast is fundamental to the success of every revenue management model. As is often required in both practice and theory, we aim to forecast the accumulated booking curve, as well as the number of reservations expected for each day in the booking horizon. To reduce the dimensionality of this problem, we apply singular value decomposition to the historical booking profiles. The forecast of the remaining part of the booking horizon is dynamically adjusted to the earlier observations using the penalized least squares and historical proportion methods. Our proposed updating procedure considers the correlation and dynamics of bookings both within the booking horizon and between successive product instances. The approach is tested on real hotel reservation data and shows a significant improvement in forecast accuracy.

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  • Haensel, Alwin & Koole, Ger, 2011. "Booking horizon forecasting with dynamic updating: A case study of hotel reservation data," International Journal of Forecasting, Elsevier, vol. 27(3), pages 942-960, July.
    • Handle: RePEc:eee:intfor:v:27:y::i:3:p:942-960
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    2. Tianxiang Zheng & Shaopeng Liu & Zini Chen & Yuhan Qiao & Rob Law, 2020. "Forecasting Daily Room Rates on the Basis of an LSTM Model in Difficult Times of Hong Kong: Evidence from Online Distribution Channels on the Hotel Industry," Sustainability, MDPI, vol. 12(18), pages 1-17, September.
    3. Đukec, Damira & Čanadi, Vesna, 2019. "Yield Management in the Hotel Industry of Croatia," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2019), Rovinj, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Rovinj, Croatia, 12-14 September 2019, pages 309-316, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    4. Larry Weatherford, 2016. "The history of forecasting models in revenue management," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 15(3), pages 212-221, July.
    5. Noelia Oses & Jon Kepa Gerrikagoitia & Aurkene Alzua, 2016. "Modelling and prediction of a destination’s monthly average daily rate and occupancy rate based on hotel room prices offered online," Tourism Economics, , vol. 22(6), pages 1380-1403, December.
    6. Apostolos Ampountolas, 2019. "Forecasting hotel demand uncertainty using time series Bayesian VAR models," Tourism Economics, , vol. 25(5), pages 734-756, August.
    7. Naragain Phumchusri & Phoom Ungtrakul, 2020. "Hotel daily demand forecasting for high-frequency and complex seasonality data: a case study in Thailand," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(1), pages 8-25, February.
    8. Larissa Koupriouchina & Jean-Pierre van der Rest & Zvi Schwartz, 2023. "Judgmental Adjustments of Algorithmic Hotel Occupancy Forecasts: Does User Override Frequency Impact Accuracy at Different Time Horizons?," Tourism Economics, , vol. 29(8), pages 2143-2164, December.
    9. Timothy Webb, 2022. "Forecasting at capacity: the bias of unconstrained forecasts in model evaluation," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(6), pages 645-656, December.
    10. Zvi Schwartz & Timothy Webb & Jean-Pierre I van der Rest & Larissa Koupriouchina, 2021. "Enhancing the accuracy of revenue management system forecasts: The impact of machine and human learning on the effectiveness of hotel occupancy forecast combinations across multiple forecasting horizo," Tourism Economics, , vol. 27(2), pages 273-291, March.
    11. Apostolos Ampountolas, 2021. "Modeling and Forecasting Daily Hotel Demand: A Comparison Based on SARIMAX, Neural Networks, and GARCH Models," Forecasting, MDPI, vol. 3(3), pages 1-16, August.
    12. E. Martinez-De-Pison & J. Fernandez-Ceniceros & A. V. Pernia-Espinoza & F. J. Martinez-De-Pison & Andres Sanz-Garcia, 2016. "Hotel Reservation Forecasting Using Flexible Soft Computing Techniques: A Case of Study in a Spanish Hotel," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 15(05), pages 1211-1234, September.
    13. Ulrich Gunter, 2021. "Improving Hotel Room Demand Forecasts for Vienna across Hotel Classes and Forecast Horizons: Single Models and Combination Techniques Based on Encompassing Tests," Forecasting, MDPI, vol. 3(4), pages 1-36, November.

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