Dynamic pricing with two revenue streams |
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Authors: | Weifen Zhuang Michael ZF Li |
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Institution: | a School of Management, Xiamen University, Fujian 361005, Chinab Nanyang Business School, Nanyang Technological University, Singapore 639798, Singapore |
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Abstract: | We study casino revenue management through the pricing of hotel rooms in the presence of gaming revenue, which is random. We identify a stochastic order based on customers’ gaming profiles, from which a monotonic inventory price of rooms is obtained. We develop a threshold-type pricing policy for a special customer segmentation scheme that allows customers’ winning profiles to be ranked in terms of the failure rate order. Our results shed new light on customer valuation and market segmentation. |
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Keywords: | Dynamic pricing Primary revenue Ancillary revenue |
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