Marriott International Increases Revenue by Implementing a Group Pricing Optimizer

Hormby, Sharon; Morrison, J. A.; Dave, Prashant; Meyers, Michele; Tenca, Tim

doi:10.1287/inte.1090.0482

Cited by 34 publications

(30 citation statements)

References 5 publications

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“…A similar drawback has been identified by Hormby et al. () for group room block reservations. The impact of such opportunities on the bidding practice is considered in the following section.…”

Section: The Myopic (Basic) Approachsupporting

confidence: 69%

“…This practice has been documented by Hormby et al. () for hotels’ group sales. Furthermore, because the (per‐unit) pricing decision is independent of the required capacity, the pricing of future requests will be determined following the same procedure.…”

Section: The Myopic (Basic) Approachmentioning

confidence: 69%

“…This model captures the fixed price, which is commonly used. This has also been the practice for hotel room group reservations (Hormby, Morrison, Dave, Meyers, & Tenca, ).…”

Section: The Myopic (Basic) Approachmentioning

confidence: 99%

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Selling Finite Capacity in Bulks*

Eynan

Narasimhan²

2016

Decision Sciences

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We consider a firm that owns a limited capacity for the delivery of services or for the production of customized products. Potential buyers specify the amount of capacity they will require for the execution of their intended services, goods or projects. Based on the size of the requirement, the firm makes a bid while being challenged in various ways: (1) it only knows the underlying probability function from which its customers’ reservation prices are drawn, (2) arrival of additional future requests is stochastic, and, (3) the firm knows in advance neither the magnitude of these potential requests nor the buyer's reservation price. The firm aims to maximize its expected profit by choosing its pricing mechanism. The fact that capacity is demanded in varying amounts distinguishes this problem from most available literature in which standard sizes are sold or partial fulfillment and displacement are permitted. Lacking such allowances presents a new challenge to the firm as in conjunction with pricing it should also address the issue of various sizes requests’ compatibility to achieve optimal utilization of its capacity in order to maximize expected profit. In this article, we consider two approaches of handling this problem: myopic and foresighted. We formulate and analyze the problem to obtain the firm's optimal bidding decisions as well as managerial insight about the optimal bid level and its important role in coordinating buyers’ requests. Furthermore, due to this role, pricing patterns in this environment are different than those in standard unit sales.

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Section: The Myopic (Basic) Approachsupporting

confidence: 69%

Section: The Myopic (Basic) Approachmentioning

confidence: 69%

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Selling Finite Capacity in Bulks*

Eynan

Narasimhan²

2016

Decision Sciences

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“…Modelos de gestão das receitas que contemplam a venda de alojamentos associada à venda de alimentos e bebidas (Cross, Higbie & Cross, 2008) ou de salas para reuniões (Hormby;Morrison;Dave;Meyers & Tenca, 2010). São apresentados na literatura.…”

Section: Preços E Receitasunclassified

Análise da relação entre a satisfação dos consumidores e os preços ofertados no sítio booking.com

Borges

Pereira

Matos

et al. 2015

TMS

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“…Similar to UPS's Target Pricing, the system uses a competitive bid-response model that predicts the probability of winning at any price point, thus providing accurate price guidance to the sales force. The initial system generated an incremental $46 million in profit (Hormby et al, 2010).…”

Section: Science Evolves From B2c To B2b -United Parcel Service (Ups)mentioning

confidence: 99%