Block Now or Relocate Later? Availability Control of Short-Term Rentals in Shared Mobility Systems Considering Long-Term Rental Reservations

27 Pages Posted: 30 Sep 2022

See all articles by Matthias Soppert

Matthias Soppert

University of the Bundeswehr Munich

Armin Wagemann

Bundeswehr University Munich

Claudius Steinhardt

University of the Bundeswehr Munich

Date Written: September 25, 2022

Abstract

Shared mobility system providers traditionally offer spontaneous short-term rentals, e.g., for cars or bikes. However, most recently, leading providers started offering customers to reserve long-term rentals in advance, including the choice of departure location and time. For the customers, these reservations now allow to reliably plan trips. For the provider, novel challenges for operational control arise. To ensure the vehicle availability at a reservation's desired location and time, the provider has two options: Either, a suitable vehicle which is located adequately can be blocked for spontaneous short-term rentals before the required time, or, a vehicle is relocated on short notice to the required location. The former can cause lost profit due to missed short-term rentals while the latter causes relocation cost.

In this work, we formulate a profit maximizing provider's problem of controlling vehicle availability for short-term rentals under the consideration of given long-term rental reservations. We demonstrate that this problem can be interpreted and formulated as a mirrored overbooking problem. This allows to derive the optimal dynamic policy as well as a heuristic based on the problem's static equivalent. Two easy-to-implement heuristic policies serve as practice-relevant benchmarks. In extensive numerical studies, we compare the policies’ performance under systematic variation of the problem's main parameters, such as number of reservations, time horizon length, and relocation cost. We derive valuable managerial insights, such as the conditions under which the simpler policies perform nearly optimal in terms of profit, as well as how the service-related metric of rentals is affected.

Keywords: Transportation, Shared Mobility Systems, Long-Term Rental Reservations, Availability Control, Optimization

JEL Classification: C44, M19

Suggested Citation

Soppert, Matthias and Wagemann, Armin and Steinhardt, Claudius, Block Now or Relocate Later? Availability Control of Short-Term Rentals in Shared Mobility Systems Considering Long-Term Rental Reservations (September 25, 2022). Available at SSRN: https://ssrn.com/abstract=4228996 or http://dx.doi.org/10.2139/ssrn.4228996

Matthias Soppert (Contact Author)

University of the Bundeswehr Munich ( email )

Werner-Heisenberg-Weg 39
Neubiberg, 85577
Germany

Armin Wagemann

Bundeswehr University Munich ( email )

Werner-Heisenberg-Weg 39
Neubiberg, 85577
Germany

Claudius Steinhardt

University of the Bundeswehr Munich ( email )

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