Title: Is demand stationary a point to nesting booking limits in revenue management?

Authors: Jean Michel Chapuis

Addresses: University of French Polynesia, P.O. Box 1841, 98703 Punaauia, Tahiti, French Polynesia

Abstract: Revenue Managers usually nest the booking limits to avoid the situation in which high-fare bookings are rejected in favour of low-fare class. To date, there are both net nesting and threshold nesting methods. However, the consequence on revenues of each one is not clearly understood. This research investigates their underlying assumptions and supports that the stationarity of the demand process is the key point. This paper also suggests a co-integration test and an event study methodology to know what is appropriate in practice.

Keywords: early bird hypothesis; net nesting; revenue management; stationary demand process; threshold nesting; booking limits; high fare bookings; low fare class; co-integration tests; event study; booking authorisation; global distribution systems; home central reservation systems.

DOI: 10.1504/IJRM.2009.027384

International Journal of Revenue Management, 2009 Vol.3 No.3, pp.219 - 234

Published online: 21 Jul 2009 *

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