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
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- Setting Room Rates on Priceline: How to Optimize Expected Hotel Revenue By: Chris Anderson Ph.D.
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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 K. Anderson, Ph.D., is an assistant professor at the Cornell University 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, and numerous consumer packaged good and financial services firms. His research has been funded by numerous governmental agencies and industrial partners. 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 (canderson@cornell.edu).
