Assignment 4

Revenue Management at a Hotel

A hotel with 100 rooms considers entering into the booking market. There are two demands:

• Early demand: Before one week to the date U(80, 120) ​
• Late demand: During one week to the date U(10, 50)​

Early customers first book and pay $10 which is non-refundable. They can cancel the booking anytime before one week to the date. In the case of finalizing, they pay another $50. Late customers pay $80 which is non-refundable.

The hotel currently plans for booking policy. Past data shows that at least 80% of early customers finalize the booking. If overbooking is realized, the hotel pays a penalty of $150 to each booked customer.​

Use the dataset, Assignment Hotel.xlsx, to analyze how the hotel can maximize profit.

Maximize Profit (X) = Booking fee + Early demand profit + Late demand profit – Overbooked cost