What sort of revenue management tactic allows reservations to be taken for a certain date as long as the guest arrives before the date?
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Overbooking is a well-known practice in the hotel industry which could be
defined as confirming more rooms than the available capacity of the hotel.
The optimal overbooking level balances the lost revenue due to empty
seats/rooms, and the penalties (financial compensation ) and loss of customer
goodwill when the firm is faced with more demand than available capacity.
The theoretical and practical problems in calculating the optimal number of
overbookings concerning demand forecasting, non-linear costs of overbookings,
dynamic booking limits,variation of capacity .
The standard expected marginal revenue technique must be used.
According to it, the optimal level of overbookings is where the expected marginal
cost associated with overbooking an additional room is equal to the expected
marginal revenue of the same additionally overbooked room.
defined as confirming more rooms than the available capacity of the hotel.
The optimal overbooking level balances the lost revenue due to empty
seats/rooms, and the penalties (financial compensation ) and loss of customer
goodwill when the firm is faced with more demand than available capacity.
The theoretical and practical problems in calculating the optimal number of
overbookings concerning demand forecasting, non-linear costs of overbookings,
dynamic booking limits,variation of capacity .
The standard expected marginal revenue technique must be used.
According to it, the optimal level of overbookings is where the expected marginal
cost associated with overbooking an additional room is equal to the expected
marginal revenue of the same additionally overbooked room.
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