Improving the multidimensional sequencing of hotel rooms on an online travel agency web site

A stochastic programming model is developed to design the optimal sequence of hotels that enables customers to find hotels at the minimum search cost and maximum utility gained from hotels.

Abstract

The focus of this study is customer behavior during the process of booking a hotel through online travel agencies (OTAs). We developed a stochastic programming model to design the optimal sequence of hotels that enables customers to find hotels at the minimum search cost and maximum utility gained from hotels. The number of available hotels in the sequence was strategically decided to minimize search cost. We considered the multidimensional preferences of customers, including price, star rating, review rating, and reservation price. We collected customer information through a survey and took hotel information from a selected OTA. This information was then used through numerical simulations to test the performance of the modeling approach. The results suggest that hotels with higher utility, review rating, star rating, and price should be ranked in the upper position of the sequence. We highlight an application of the proposed model that can help improve hotel performance in today's competitive market.