A framework for stochastic simulation of distribution practices for hotel reservations

Abstract

The focus of this study is primarily on the Greek hotel industry. The objective is to design and develop a framework for stochastic simulation of reservation requests, reservation arrivals, cancellations and hotel occupancy with a planning horizon of a tourist season. In Greek hospitality industry there have been two competing policies for reservation planning process up to 2003: reservations coming directly from customers and a reservations management relying on tour operator(s). Recently the Internet along with other emerging technologies has offered the potential to disrupt enduring distribution arrangements. The focus of the study is on the choice of distribution intermediaries. We present an empirical model for the hotel reservation planning process that makes use of a symbolic simulation, Monte Carlo method, as, requests for reservations, cancellations, and arrival rates are all sources of uncertainty. We consider as a case study the problem of determining the optimal booking strategy for a medium size hotel in Skiathos Island, Greece. Probability distributions and parameters estimation result from the historical data available and by following suggestions made in the relevant literature. The results of this study may assist hotel managers define distribution strategies for hotel rooms and evaluate the performance of the reservations management system. © 2015 AIP Publishing LLC.