Title: Optimal hotel segmentation mix strategy

Authors: Shaul P. Ladany

Addresses: Department of Industrial, Engineering and Management, Ben-Gurion University of the Negev, P.O. Box 653, Beer Sheva 84105, Israel

Abstract: A model for the selection of the optimal mix of market segments (the total number of market segments and the specific market segments included) of a hotel is suggested. It is evaluated for a given set of potential market segments, when the individual demand curves are known in each segment. The problem is formulated as an efficient single state-variable Dynamic Programming model. It is suggested that the derived static results should be the optimal strategy to be used (instead of unfounded management directives) as input to tactical yield management policies in stochastic environments. A numerical example is provided for a 400-room hotel.

Keywords: yield management; hotel management; segmentation mix; number of segments; market segmentation; pricing policy; dynamic programming.

DOI: 10.1504/IJSTM.2001.001588

International Journal of Services Technology and Management, 2001 Vol.2 No.1/2, pp.18-27

Published online: 04 Jul 2003 *

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