S40 / Hospitality and travel
Hotel cancellation risk and the cost of overbooking
A hotel revenue manager must balance empty rooms against the cost of accommodating guests elsewhere. Test whether booking-level cancellation probabilities improve a simulated overbooking policy compared with uniform cancellation assumptions.
Planned topic
Proposed design & source
Calibrated cancellation models; revenue management; asymmetric loss
Define a booking-time prediction point and audit whether each field was available then. Exclude final reservation status/date, later booking changes and other post-outcome fields. Compare calibrated logistic/additive models with boosting; aggregate predicted cancellations across arrival dates with dependence sensitivity.
Evaluation: Use time-based arrival holdouts and a hotel-transfer stress test. Report cancellation calibration, log loss and arrival-date prediction error. Compare fixed-rule and model-based overbooking in a simulator with explicit room capacity, room-night logic, rates and displacement costs.
Boundary: Two hotels do not establish universal performance. Original booking-time versions of some fields may be unavailable; label that limitation. Capacity and counterfactual overbooking revenue are simulated, not measured business improvement.