Expanding the revenue management frontier: Optimal air planning in the cruise industry

Lieberman, Warren; Dieck, Tamara

doi:10.1057/palgrave.rpm.5170002

Cited by 17 publications

(10 citation statements)

References 1 publication

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“…It sells perishable products and services over a finite time period and shares a number of common characteristics with airlines and hotel industries such as constrained capacity, seasonally varying demands (Lieberman and Dieck, 2001) and highly segmented markets (Dickinson and Vladimir, 1989). The objective is to maximize the revenue received by the cruise line from the sales of rooms on each sailing.…”

Section: Literature Reviewmentioning

confidence: 99%

Modeling a cruise line revenue management problem

Li¹,

Miao

Wang

2014

J Revenue Pricing Manag

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The success of cruise line revenue management at the company which is studied in this article depends on pricing and assignment of room capacity. Market demand is typically defined by such criteria as view requirements, bedding requirements, room locations and amenities. The essence is to price each market segment and allocate cruise room capacity at the same time in order to maximize the total revenue potential. Side constraints include capacity limits on lifeboats and personnel requirements, for example, the number of baby counselors (required by law). It is also important to follow the business rules such as those pertaining to refundable tickets. However, this article's focus and the key priority is to develop a linear model that can facilitate demand forecasting, which not only considers pricing and room assignment, but also considers potential onboard expenses of customers. A numerical test is conducted based on production data. The results indicate that the solution obtained through this model is valid in practice and shows significant annual revenue increase compared with the previous system.

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Section: Literature Reviewmentioning

confidence: 99%

Modeling a cruise line revenue management problem

Li¹,

Miao

Wang

2014

J Revenue Pricing Manag

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“…Based on the initial success of RM within the airline industry, it was not long before other industries began to adopt these practices. Currently, there are numerous industries using RM and many others considering using RM, including airlines, hotels, car rentals, casinos, restaurants, grocery chains, golf courses, cruise lines, apartment rentals, sports, performing arts, media and so on (for example, see Heching et al, 2002;Kimes and Schruben, 2002;Kuyumcu, 2002;Lieberman and Dieck, 2002;Hawtin, 2003;Lippman, 2003;Vinod, 2004;Kimes, 2005;Garrow et al, 2006;Gu, 2006;Garrow and Ferguson, 2008). Although the growth in RM across industries is impressive, one may nonetheless question the wisdom of applying RM techniques originally developed for the airline industry to other industries without considering market characteristics.…”

Section: Introductionmentioning

confidence: 99%

Do you really know who your customers are?: A study of US retail hotel demand

Lee

Garrow

Higbie

et al. 2009

J Revenue Pricing Manag

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This study uses booking data from 28 US hotels to investigate the validity of two key assumptions in hotel revenue management: (1) customers who book later are willing to pay higher rates than customers who book earlier; and (2) demand is stronger during the week than on the weekend. Empirical results based on an analysis of booking curves, average paid rates and occupancy rates for group, restricted retail, unrestricted retail and negotiated demand segments challenge the validity of these assumptions. Based

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“…In terms of the cruise line literature focusing on revenue management, only four articles which have touched on this issue are found in Ladany and Arbel (1991), Lieberman and Dieck (2002), Ji and Mazzarella (2007), and Sun et al (2010).…”

Section: Rm Overview Abstractmentioning

confidence: 99%

“…Improvements in the air and land-based accommodation planning capabilities provide significant opportunities for cruise lines. In order to make this effort, Lieberman and Dieck (2002) propose an optimal air planning program, which emphasizes on both routing passengers on flights and negotiating contract fares with the airlines. The results show that, in cruise line industry, purchase of airfare for cruise passengers can exceed 20% of revenue (Lieberman and Dieck, 2002).…”

Section: Rm Overview Abstractmentioning

confidence: 99%