%0 Journal Article
%T Empirical Evidence of Revenue Management in the Cruise Line Industry
%A Dinesh K. Gauri
%A Nur Ayvaz-Cavdaroglu
%A Scott Webster
%J Journal of Travel Research
%@ 1552-6763
%D 2019
%R 10.1177/0047287517737178
%X 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¡ªdifferent 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%¨C20%
%K revenue management
%K cruise industry
%K multinomial choice model
%K empirical application
%U https://journals.sagepub.com/doi/full/10.1177/0047287517737178