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Setting Room Rates on Priceline: How to Optimize Expected Hotel Revenue

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Abstract

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.

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2008-02-02

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hotel; room rates; online travel agents (OTA); Cornell Hospitality Tool; online booking

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Government Document

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Required Publisher Statement: © Cornell University. This report may not be reproduced or distributed without the express permission of the publisher

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