A Flexible Payment Scheme in Hotel Business
This paper introduces a flexible payment scheme in the hotel business. When a customer makes a reservation for a hotel room, the hotel offers an optional payment scheme (Scheme O). If the customer chooses the Scheme O, he/she makes a non-refundable down payment immediately. Meanwhile, the hotel offe...
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sg-smu-ink.etd_coll-10632015-09-14T02:04:36Z A Flexible Payment Scheme in Hotel Business DONG, Ciwei This paper introduces a flexible payment scheme in the hotel business. When a customer makes a reservation for a hotel room, the hotel offers an optional payment scheme (Scheme O). If the customer chooses the Scheme O, he/she makes a non-refundable down payment immediately. Meanwhile, the hotel offers a discount if the customer actually checks in to the hotel. Thus, the payment at check-out time is much lower than the original rental rate. Alternatively, if the customer rejects the Scheme O, the reservation is made under a traditional Scheme (Scheme T), where no down payment is required. However, the customer choosing Scheme T must make a full payment without any discount when he checks out from the hotel. The value of Scheme O depends on customers' cancelation or no-show due to the competition from nearby hotels. We consider two scenarios: 1). the hotel knows the expected value of competitor's rental rate (deterministic case); 2). the hotel knows the stochastic distribution of competitor's rental rate (stochastic case). We have obtained optimal solutions for Scheme O for both deterministic and stochastic cases. Moreover, we also study the interaction between designing a flexible payment scheme and pricing on the rental rate of hotel room. 2010-01-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/etd_coll/64 https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1063&context=etd_coll http://creativecommons.org/licenses/by-nc-nd/4.0/ Dissertations and Theses Collection (Open Access) eng Institutional Knowledge at Singapore Management University pricing payment scheme revenue management hotels Operations and Supply Chain Management |
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pricing payment scheme revenue management hotels Operations and Supply Chain Management DONG, Ciwei A Flexible Payment Scheme in Hotel Business |
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This paper introduces a flexible payment scheme in the hotel business. When a customer makes a reservation for a hotel room, the hotel offers an optional payment scheme (Scheme O). If the customer chooses the Scheme O, he/she makes a non-refundable down payment immediately. Meanwhile, the hotel offers a discount if the customer actually checks in to the hotel. Thus, the payment at check-out time is much lower than the original rental rate. Alternatively, if the customer rejects the Scheme O, the reservation is made under a traditional Scheme (Scheme T), where no down payment is required. However, the customer choosing Scheme T must make a full payment without any discount when he checks out from the hotel. The value of Scheme O depends on customers' cancelation or no-show due to the competition from nearby hotels. We consider two scenarios: 1). the hotel knows the expected value of competitor's rental rate (deterministic case); 2). the hotel knows the stochastic distribution of competitor's rental rate (stochastic case). We have obtained optimal solutions for Scheme O for both deterministic and stochastic cases. Moreover, we also study the interaction between designing a flexible payment scheme and pricing on the rental rate of hotel room. |
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text |
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DONG, Ciwei |
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DONG, Ciwei |
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DONG, Ciwei |
title |
A Flexible Payment Scheme in Hotel Business |
title_short |
A Flexible Payment Scheme in Hotel Business |
title_full |
A Flexible Payment Scheme in Hotel Business |
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A Flexible Payment Scheme in Hotel Business |
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A Flexible Payment Scheme in Hotel Business |
title_sort |
flexible payment scheme in hotel business |
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Institutional Knowledge at Singapore Management University |
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2010 |
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https://ink.library.smu.edu.sg/etd_coll/64 https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1063&context=etd_coll |
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