Game-Based Strategy Development for Hotel Yield Management - Innovative Management in Information and Production - page 354

Game-Based Strategy Development for Hotel
Yield Management

Koki Yoshimura and Junzo Watada

Abstract This paper deals with hotel yield management from a game perspective
in a duopoly situation of two hotels. The hotel yield management decides strategies
under consideration of the number of rooms in Bertrand game. Each hotel does
not know the strategies taken by the counter hotel. We derive the strategy that
realizes a maximum profit under the given conditions. Furthermore, we validate
the game-based strategy developed for hotel yield management.

Keywords Game theory ￿ Yield management ￿ Hotel management ￿ Bertrand
situation

1 Introduction

Today, business circumstances are more competitive. We have to develop effective
strategies to obtain an optimal profit in competitive environment. In this paper, we
propose the game-based development of strategies in yield management, that is,
model a competitive business circumstance to develop an optimal strategy using
game theory under duopolistic state.
First, the duopoly state of two hotels is analyzed in a single year using game
theory. Bertrand model is employed in this case. The Bertrand model works on
the price to obtain the maximum profit considering the number of rooms ( Wa r i p a n
2012 ).
Second, the optimal profits are derived theoretically based on mathematical game
model.