Flexible Payment Schemes in Hotel Business
This paper introduces a flexible payment scheme in the hotel business. When a customer makes a reservation for a hotel room, the hotel offers a payment discount at check-out time if the customer agrees to immediately make a non-refundable down payment. This scheme protects the hotel from customer cancelations or no-shows resulting from competition among nearby hotels while providing an opportunity for the customer to enjoy the overall payment discount. We find the optimal solution for the amount of down payment and discount, and illustrate the value of the flexible payment for both hotel and customer.
Hospitality Administration and Management
DING, Qing and Dong, Ciwei.
Flexible Payment Schemes in Hotel Business. (2011). Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/3069
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