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Dynamic Pricing For Hotel Rooms When Customers Request Multiple-Day Stays, Selvaprabu Nadarajah, Yun Fong Lim, Qing Ding

Research Collection Lee Kong Chian School Of Business

Prominent hotel chains quote a booking price for a particular type of rooms on each day and dynamically update these prices over time. We present a novel Markov decision process (MDP) formulation that determines the optimal booking price for a single type of rooms under this strategy, while considering the availability of rooms throughout the multiple-day stays requested by customers. We analyze special cases of our MDP to highlight the importance of modeling multiple-day stays and provide guidelines to potentially simplify the implementation of pricing policies around peak-demand events such as public holidays and conferences. Since computing an optimal policy …