An Intelligent Passenger Flow Prediction Method for Pricing Strategy and Hotel Operations

Abstract

Hospitality industry plays a crucial role in the development of tourism. Predicting the future demand of a hotel is a key step in the process of hotel revenue management. Hotel passenger flow prediction plays an important role in guiding the formulation of hotel pricing and operating strategies. On the one hand, hotel passenger flow prediction can provide decision support for hotel managers and effectively avoid the waste of hotel resources and loss of revenue caused by the loss of customers. On the other hand, it is the guarantee of the priority occupation of business opportunities by hotel enterprises, which can help hotel enterprises adjust their operation strategies reasonably to better adapt to the market situation. In addition, hotel passenger flow prediction is helpful to judge the overall operating condition of the hotel industry and assess the risk level of the hotel project to be built. Hotel passenger flow is affected by many factors, such as weather, environment, season, holidays, economy, and emergencies, and has the characteristics of complex nonlinear fluctuation. The existing demand predicting methods include linear methods and nonlinear methods. The linear prediction methods rely on the stability of environment and time series, so they cannot completely simulate the complex nonlinear fluctuations characteristics of hotel passenger flow. Traditional nonlinear prediction methods need to improve the prediction accuracy, and they are difficult to deal with the increasing data of hotel passenger flow. Based on the above analysis, this paper constructs a deep learning prediction model based on Long Short-Term Memory (LSTM) to predict the number of actual monthly arrival bookings. The number of actual monthly arrival bookings can reflect the actual monthly passenger flow of a hotel. The prediction model can effectively reduce the loss caused by cancellation or nonarrival of bookings due to various reasons and improve the hotel revenue. The experimental part of this paper is based on the booking demand dataset of a resort hotel in Portugal from July 1, 2015, to August 31, 2017. Artificial neural network (ANN) and support vector regression (SVR) are built as benchmark models to predict the number of actual monthly arrival bookings of this hotel. The experimental results show that, compared with the benchmark models, the LSTM model can effectively improve the prediction ability and provide necessary reference for the hotel's future pricing decision and operation mode arrangement.