Optimal room charge and expected sales under discrete choice models with limited capacity [Summary]

In this paper, researchers introduce a model that incorporates features of the fully transparent hotel booking systems and enables estimates of hotel choice probabilities in a group based on the room charges. Firstly, the authors extract necessary information for the estimation from big data of online booking for major four hotels near Kyoto station.1 Then, they consider a nested logit model as well as a multinomial logit model for the choice behavior of the customers, where the number of rooms available for booking for each hotel are possibly limited. In addition, they apply the model to an optimal room charge problem for a hotel that aims to maximize its expected sales of a certain room type in the transparent online booking systems.