Logistic Regression Case Solution
The hotel industry is prone to significant number of bookings call-offs, which are not realized due to different reasons including scheduling conflicts, natural disasters, sudden family obligations, change in plans, illness etc. This option of cancelling a booking is very convenient for the guests, as the cancellations are usually offered by the hotel industry at low cost or even at free of charge. But this situation is snot beneficial for the firms operating in the hotel industry. The cancellations are not desirable for the hotels, as these involve diminishing revenue factor. Not only this, the cancellations carried out by the guests on the very last moments involve high losses for the hotels.
In addition, the technological advancement has offered possibilities to get the bookings through online channels, as a result of which a greater change in the behavior, style and preferences of the customers have been observed. The online booking channels have further created challenges for the hotels in managing the cancellations, as the booking process is not anymore limited to the traditional customer characteristics and booking behavior.
Further, the hotels are significantly impacted by the cancellations of bookings, through different ways. First of all, due to cancelations, the hotels are not able to resell the room, as a result of which, the hotels have to face a loss in revenue and its resources. Secondly, the hotel has to bear the additional distribution based expenses, in order to generate publicity and ultimately bookings for the hotel. Thirdly, to resell a room, the hotels have to lower the prices at last, which ultimately reduces the overall profit margin. Lastly, the human resources are impacted in a way that they have to make new arrangements for the guests, after cancellation of a booking.
The Star Hotel Group is facing a severe problem of booking cancellations, as a result of which, the company is facing difficulties in generating profits. The company needs to determine out the probability of bookings, in order to remain proactive by taking new bookings, according to the predictions. The company wants a machine learning based solution in order to get accurate predictions about the number of booking cancellations. This would help the company in formulating appropriate profit policies for refunds and booking cancellations.
The main objective of the research is to devise out a machine learning based solution, for predicting the accuracy in number of bookings, likely to be cancelled.
The research questions addressed in the study is as follows:
- Whether a booking would likely to be canceled or not?
In order to determine out whether a booking would likely to be cancelled or not, the quantitative analysis has been performed over the data, provided by Star Hotel Group. The quantitative data analysis includes the linear regression model, including the uni-variate and the bivariateanalysis, which has been performed over the data in order to determine whether a booking would be cancelled by the customer or not, based on the machine earning based solution……………….
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