Empirical Evidence of Revenue Management in the Cruise Line Industry

Nur Ayvaz-Cavdaroglu, Dinesh K. Gauri, Scott Webster

    Research output: Contribution to journalArticle

    2 Citations (Scopus)

    Abstract

    Revenue management (RM) has received considerable attention from both academic and business professionals. It encompasses several techniques regarding capacity allocation, pricing, and resource management of fixed, time-sensitive capacity. RM can be roughly divided into two categories defined by the control mechanism that increases revenue: capacity allocation or price optimization. Our work falls in the latter category. In our model, we allow for partial substitutability among products (e.g., a customer making a purchase decision may consider multiple alternatives—different departure dates, different destinations, different cabin types). We also include marketing expense in addition to prices as a lever for increasing revenue. These features are relevant to dynamic pricing in practice. The method is illustrated with booking data from a cruise company, yielding optimal advertising and prices for 300 products. The application of the model results in an increase in revenue in the range of 8%–20%.

    Original languageEnglish (US)
    Pages (from-to)104-120
    Number of pages17
    JournalJournal of Travel Research
    Volume58
    Issue number1
    DOIs
    StatePublished - Jan 1 2019

    Fingerprint

    revenue
    industry
    management
    evidence
    Industry
    Marketing
    pricing
    marketing
    resource management
    purchase
    Costs
    customer
    price
    Revenue management
    Empirical evidence
    Revenue
    Cruise
    allocation
    product
    Capacity allocation

    Keywords

    • cruise industry
    • empirical application
    • multinomial choice model
    • revenue management

    ASJC Scopus subject areas

    • Geography, Planning and Development
    • Transportation
    • Tourism, Leisure and Hospitality Management

    Cite this

    Empirical Evidence of Revenue Management in the Cruise Line Industry. / Ayvaz-Cavdaroglu, Nur; Gauri, Dinesh K.; Webster, Scott.

    In: Journal of Travel Research, Vol. 58, No. 1, 01.01.2019, p. 104-120.

    Research output: Contribution to journalArticle

    Ayvaz-Cavdaroglu, Nur ; Gauri, Dinesh K. ; Webster, Scott. / Empirical Evidence of Revenue Management in the Cruise Line Industry. In: Journal of Travel Research. 2019 ; Vol. 58, No. 1. pp. 104-120.
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