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 nonrefundable 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 | Operations and Supply Chain Management
INFORMS MSOM Conference, 17-19 June 2012, New York
City or Country
New York, NY, USA
DING, Qing; DONG, Ciwei; and Dong, Lingxiu.
Flexible Payment Schemes in Hotel Business. (2012). INFORMS MSOM Conference, 17-19 June 2012, New York. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/3482
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