An integrated framework for advanced hotel revenue management

Neamat Farouk El Gayar, Mohamed Saleh, Amir Atiya, Hisham El-Shishiny, Athanasius Alkes Youhanna Fayez Zakhary, Heba Abdel Aziz Mohammed Habib

Research output: Contribution to journalArticle

38 Citations (Scopus)

Abstract

Purpose: This paper aims to present an integrated framework for hotel revenue room maximization. The revenue management (RM) model presented in this work treats the shortcomings in existing systems. In particular, it extends existing optimization techniques for hotel revenue management to address group reservations and uses "forecasted demand" arrivals generated from the real data. Design/methodology/approach: The proposed forecasting module attempts to model the hotel reservation process from first principles. In particular, it models hotel arrivals as an interrelated process of stochastic parameters like reservations, cancellations, duration of stay, no shows, seasonality, trend, etc. and simulates forward in time the actual process of reservations to obtain the forecast. On the other hand, the proposed optimization module extends existing optimization techniques for hotel revenue management to address group reservations, while including integrality constraints and using "forecasted demand" arrivals generated from the data. The optimization model is based on large-scale integer programming model to optimize decision rules for accepting reservations. Findings: A case study based on three different sets of reservation records of simulated hotel data was conducted to test the operation of the system on real data. Results showed that the model is able to generate effective recommendations to maximize revenue. Originality/value: The main value of this paper is that it presents an integrated framework for hotel room revenue maximization. The novelty introduced in this approach is that it is based on an advanced room demand forecast model that simulated the reservation process from its first principles and produces demand scenarios that are used by an optimization model to generate proper recommendations.

Original languageEnglish
Pages (from-to)84-98
Number of pages15
JournalInternational Journal of Contemporary Hospitality Management
Volume23
Issue number1
DOIs
Publication statusPublished - 8 Feb 2011

Keywords

  • Forecasting
  • Hotels
  • Optimization techniques
  • Profit maximization

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management

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