Online Travel Agency Channel Pricing Policy based on Dynamic Pricing Model to Maximize Sales Profit Using Nonlinear Integer Programming Approach

DOI

10.2991/icoemis-19.2019.48How to use a DOI?

Keywords

Online Travel Agency Channel, Pricing Policy, Dynamic Pricing, Revenue Management

Abstract

A dynamic pricing strategy on the cooperation between a hotel and an online travel agency (OTA) is commonly applied to build a pricing policy. The purpose of this study is to propose a pricing policy according to the dynamic pricing model on a single online travel agency channel. The paper provides a dynamic pricing model adjusted to hotel problems with multiple room types. The study consists of two stages. First, we apply a revenue management tool that is dynamic pricing to model the effect of price on demand. The price dynamically changes based on the parameter of demand model. Second, we use a nonlinear integer programming approach to maximize the profit by substituting the demand model which has the lowest root mean square error. The parameter of the demand model is estimated by using the historical sales-price data from one of the hotels in Bandung, West Java, Indonesia. Our results propose a pricing policy of each room types that able to increase 18.54% from the historical sales profit. The proposed pricing policy completes the gap of the method in the existing pricing policy. Moreover, the findings provide an optimal room rate to the front office manager along the planning horizon.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Salman Shadiqurrachman
AU  - Ari Ridwan
AU  - Artha Kusuma
PY  - 2019/11
DA  - 2019/11
TI  - Online Travel Agency Channel Pricing Policy based on Dynamic Pricing Model to Maximize Sales Profit Using Nonlinear Integer Programming Approach
BT  - Proceedings of the 2019 1st International Conference on Engineering and Management in Industrial System (ICOEMIS 2019)
PB  - Atlantis Press
SP  - 351
EP  - 358
SN  - 1951-6851
UR  - https://doi.org/10.2991/icoemis-19.2019.48
DO  - 10.2991/icoemis-19.2019.48
ID  - Shadiqurrachman2019/11
ER  -