Timing Matters: Travelers' Advanced-Booking Expectations and Decisions

Abstract

Dynamic revenue management models often price discriminate based on time. The literature concerning changes in travelers' propensity to book a room over time, however, is scant, and industry practices provide few and somewhat contradictory hints about the phenomenon. To facilitate efficient and dynamic revenue management polices, this study further explores how and why customers' propensity to book changes over time. Specifically, this study empirically tests how the expectations of advanced-booking customers change in connection with the likelihood of being offered a better deal and the sellout risk as the date of stay nears. The results indicate that timing matters and that the expectations' change pattern is more complex than anticipated. These findings underscore the importance of the timing element and call attention to the need for more empirical research on the role of timing in travelers' advanced-booking decisions.