Dynamic Pricing In A Competitive Environment Based On Customer Discrete Choice Of Hotel Room

Dynamic pricing is a strategy which adjusts real-time inventory to obtain the maximum benefit,and has been important technology in revenue management.In recent years,with the development of Internet technology,dynamic pricing has become a hot topic in academia and has been widely used in the sales of perishable product,such as airline tickets,car rental companies and hotel rooms.The main issue that the traditional dynamic pricing research concerns is how the monopolists make price as a mean to stimulate demand for greater expected return.With the development of science and technology,the dissemination of information becomes more and more convenient,customers can get price information through multiple channels,They compare to select the most appropriate goods or services.Then,when the manufacturer or brand make price,they consider not only their own inventories and needs,but also the opponents' reaction.They need consider the impact of competitors' prices on their own earnings.The development of technology makes the competition more and more intense and consumers' choice more and more diverse.Without considering customers' behavior,the price can be impractical.Therefore,the competitive environment and customer behavior should be taken into account when dynamicly pricing,so that the manufacturer can correctly guide the demand to enhance earnings.This paper selects the hotel industry as application object of dynamic pricing and reviews the current dynamic pricing.We use the theory of dynamic optimization and game theory and introduct competitive factors to dynamic pricing.This paper presents a game theory model to describe the Real-time dynamic pricing of two competitive hotels.We use heuristic interpolation strategies solve dynamic pricing with incomplete information.The third chapter assumes the hotels which provide the same type of hotel room grasp full information.This chapter establishs complete information model based on customers' choice behavior to study hotels' dynamic pricing strategy in a competitive environment.We investigate the related properties of the income function,and then prove the existence of Nash equilibrium price and gives solving method to the Nash equilibrium prices.The numerical example results shows that the equilibrium price between the two sides isn't increase monotonicly,the price decreases after the first increase with T.Chapter IV models in the assumptions that hotel can not obtain competitors' real-time room margin.Proposed a heuristic interpolation algorithm to establish incomplete information model and discusses how to price to maximize revenue when only know the total number of the hotel.This chapter verifies the validity of the interpolation strategy by comparing the three strategies to balanced strategy.The chapter V is the numerical example.First verifies the effectiveness of the heuristic interpolation strategies.The results showes that unless Hotel 2 implement predatory prices,hotel 1 can use interpolation strategy to make up for the loss of revenue due to incomplete information.Then analyzes the impact of the parameters ?₂ on revenue,and put forward some suggestions for management.