A time-varying behavioral economic model for dynamic hotel demand analysis

This study addresses the static limitations of current behavioral economic models by developing and empirically validating a novel time-varying behavioral economic model. Integrating a behavioral economic framework with nonlinear time-varying parameter estimation via a Bayesian approach, the model is empirically demonstrated through a hotel booking dataset. Results reveal significant heterogeneity in key behavioral characteristics (baseline demand and price sensitivity) across diverse customer segments (families vs. non-families, early vs. late bookers). Furthermore, these parameters evolve dynamically over time, exhibiting distinct seasonal patterns in price responsiveness, particularly in resort hotels. The proposed model provides a more granular understanding of consumer behavior, offering a robust tool for enhanced dynamic pricing, customer segmentation, and micro-targeted hotel management strategies in changing markets.