Three essays on revenue management in nonprofit performing arts organizations

Abstract

The purpose of this dissertation is to demonstrate the effectiveness of revenue management (RM) techniques in nonprofit performing arts organizations, although these organizations are characterized by multiple and conflicting objectives other than revenue. Indeed, a considerable amount of RM literature has been dedicated to issues detectable in for-profit industries that are mature users of RM, such as the trasportation and hospitality industries. Therefore, contextualizing the theory and practice of RM in the field of performing arts requires a special attention as it is necessary to consider the peculiarities of this sector: the educational function it performs, a service offered that lacks standardization and the uncertain nature of the demand for creative goods. The dissertation is composed of three papers, each of which examines a RM-type problem topic that a nonprofit theatre may face. The first paper investigates customers’ choice behaviour on theater ticket purchase. In particular, it analyzes the extent to which the different attributes that are source of price discrimination affect the choice of the ticket, and how this effect differs among the theatregoers, assuming heterogeneity in preferences. To this purpose, two modelling approaches, namely multinomial logit (with socio-demographic characteristics) and latent class are applied to a dataset for 2010-2013 from the sale system of the Royal Danish National Theatre. The second paper tackles the issue of identifying the most efficient subset of the events scheduled by a theatre, to offer as a subscription. Given the multi-objective nature of nonprofit performing arts organizations, an integrated model that make use of a probabilistic approach and super-efficiency data envelopment analysis is formulated. The results of different simulations are presented. Moreover, an econometric analysis is carried out to obtain some insights into what determines the efficiency level of a subscription. The third paper develops a multi-objective optimization model that simultaneously considers pricing and seat allocation, integrating the demand forecast with a customer choice model. The proposed model is validated with booking data from the Royal Danish Theatre during the period 2010-2013. Results obtained show the potential of the model in assisting theatre manager in setting price and defining the configuration of the seating area.