Booking Prediction Models for Peer-to-peer Accommodation Listings using Logistics Regression, Decision Tree, K-Nearest Neighbor, and Random Forest Classifiers
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Background: Literature in the peer-to-peer accommodation has put a substantial focus on accommodation listings' price determinants. Developing prediction models related to the demand for accommodation listings is vital in revenue management because accurate price and demand forecasts will help determine the best revenue management responses.
Objective: This study aims to develop prediction models to determine the booking likelihood of accommodation listings.
Methods: Using an Airbnb dataset, we developed four machine learning models, namely Logistics Regression, Decision Tree, K-Nearest Neighbor (KNN), and Random Forest Classifiers. We assessed the models using the AUC-ROC score and the model development time by using the ten-fold three-way split and the ten-fold cross-validation procedures.
Results: In terms of average AUC-ROC score, the Random Forest Classifiers outperformed other evaluated models. In three-ways split procedure, it had a 15.03% higher AUC-ROC score than Decision Tree, 2.93 % higher than KNN, and 2.38% higher than Logistics Regression. In the cross-validation procedure, it has a 26,99% higher AUC-ROC score than Decision Tree, 4.41 % higher than KNN, and 3.31% higher than Logistics Regression. It should be noted that the Decision Tree model has the lowest AUC-ROC score, but it has the smallest model development time.
Conclusion: The performance of random forest models in predicting booking likelihood of accommodation listings is the most superior. The model can be used by peer-to-peer accommodation owners to improve their revenue management responses.
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