Faculty & Research
Setting Room Rates on Priceline: How to Optimize Expected Hotel Revenue
Vol 8 No 4
By: Chris Anderson Ph.D.
Executive Summary: This report and tool combination develops a novel approach to set prices on Priceline.com to maximize revenues received from releasing rooms to Priceline. When setting rates on Priceline, hotel properties face a straightforward auction-like pricing decision. Priceline is an opaque channel with no property information communicated to the consumer. As such other factors (e.g, brand, amenities, location) play no role in setting rates. Properties face what appears to be a dilemma-set prices higher to make more revenue but potentially lose the sale, or set prices lower to make the sale but leave some money on the table. This report provides a brief introduction to Priceline.com and discusses the daily data that properties receive from Priceline. The report then outlines how these data can be used to the advantage of the property in setting Priceline rates. A fully functional model implemented in Excel accompanies this report in the form of a Cornell Hospitality Tool. As the user of this model you simply copy and paste data you receive from Priceline into the tool.
All model inputs are automatically updated and optimal prices calculated.
Priceline Pricing Tool
Download the Priceline Pricing Tool
Your Comments Please
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- Setting Room Rates on Priceline: How to Optimize Expected Hotel Revenue By: Chris Anderson Ph.D.
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Comments
Chris Andersen’s report on Priceline revenue maximization was extremely engaging and thoughtful. It was a great learning experience for me.
Thanks!
Anupam Dasgupta
GM
Ista Pune
Other Reports or Articles You May Find of Interest
- Pricing for Revenue Enhancement in Asian and Pacific Region Hotels:A Study of Relative Pricing Strategies, by Linda Canina and Cathy A. Enz
- Segmenting Hotel Customers Based on the Technology Readiness Index, by Rohit Verma, Liana Victorino, Kate Karniouchina, and Julie Feickert
- Low-price Guarantees: How Hotel Companies Can Get It Right, by Steven A. Carvell and Daniel C. Quan
About Chris Anderson Ph.D.
Chris Anderson is an assistant professor at the Cornell School of Hotel Administration. Prior to his appointment in 2006, he was on faculty at the Ivey School of Business in London, Ontario Canada. His main research focus is on revenue management and service pricing. He actively works with industry, across numerous industry types, in the application and development of RM, having worked with a variety hotels, airlines, rental car and tour companies as well as numerous consumer packaged good and financial services firms. Anderson’s research has been funded by numerous governmental agencies and industrial partners and he serves on the editorial board of the Journal of Revenue and Pricing Management and is the regional editor for the International Journal of Revenue Management. At the Hotel School he teaches courses in revenue management and service operations management.
For more information visit http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=180
