Article ID: | iaor20043681 |
Country: | United States |
Volume: | 12 |
Issue: | 4 |
Start Page Number: | 502 |
End Page Number: | 518 |
Publication Date: | Dec 2003 |
Journal: | Production and Operations Management |
Authors: | Collier David A., Baker Timothy K. |
Keywords: | service, yield management |
We investigate the revenue impact of a new Price Setting Method (PSM) and compare it with the industry standard Bid Price Method (BPM). This comparison is performed via a simulation that was validated by a major hotel chain. In 27 out of the 32 cases, the PSM outperformed the BPM based on statistically significant tests. The PSM produces an average revenue increase of 34%, which can be thought of as an upper bound on the realistic revenue increase.