Let your algorithm shine: The impact of algorithmic cues on consumer perceptions of price discrimination

How can hospitality and tourism firms reduce consumers’ perceptions of unfairness regarding their price discrimination practices? We propose that pricing algorithms, as advanced revenue management tools, can play a role. We demonstrated the effects of an algorithmic cue through a tweet analysis and four experiments. We found that informing consumers that the offered price is determined by algorithms mitigated their negative responses in the disadvantaged price discrimination context. Also, such algorithmic cue effects only occur when the algorithm is less anthropomorphic (vs. highly anthropomorphic or human). The positive impact of an algorithmic cue was identified not only when customers directly experienced disadvantaged price discrimination but also when they obtained the information from different channels. The results suggest hospitality and tourism firms that have implemented pricing algorithms in their revenue management can benefit from disclosing an algorithmic cue to customers.     

Marketing research and revenue optimization for the cruise industry: A concise review

This paper presents a concise review of the cruise industry mainly from marketing research and revenue optimization prospects. In recent years, the cruise industry has experienced an exciting growth. However, as one of the fastest growing and most profitable categories in the entire leisure market, this industry has hardly received any research attention. Given the limited academic articles, this paper presents a concise review about this budding research topic. First of all, a discussion about global cruise industry is conducted. Then, academic studies of the cruise industry on general marketing research, revenue management, itinerary design/optimization, optimal market segmentation, demand infiltration and economic issues are reviewed. Finally, some promising directions for future research are presented.     

邮轮收益管理的舱位分配：基于EMSR-a和EMSR-b的比较分析

邮轮业被称为“漂浮在黄金水道上的黄金产业”,近几年达到8％左右的增长速度,成为现代旅游业中发展最迅速的行业。与航空和酒店业一样,邮轮业具有收益管理的所有行业特征,可以看作是典型的收益管理行业。文章基于北美邮轮市场的实际数据,对邮轮收益管理的需求分布特征和存量分配问题进行了研究。首先,以邮轮公司特定航线的需求数据为基础,将实际数据与多种概论分布进行比较,来挖掘邮轮舱位水平上总需求的分布规律。研究表明,正态分布和伽玛分布能较好地拟合邮轮舱位总需求的分布特征。其次,以正态分布为例,基于EMSR—a和EMSR—b两种舱位分配算法,以某次航行的实际数据为基准需求,对高总需求和低总需求下分别考虑（1）高价格舱位高需求和（2）低价格舱位高需求的4种需求状况进行了模拟,并对两种存量分配方法的分配效果进行了比较。结果表明,两种方法分配效果的优劣取决于实际的需求状况。     

Exploring effective price presentation format to reduce decision difficulty and increase decision satisfaction

Variable pricing is frequently employed by service firms that adopt revenue management practices. This strategy is effective in stimulating and increasing revenue by appealing to customers with different levels of price sensitivity. However, by providing excessive price options, a company may cause choice overload for customers. Within the framework of behavioral economics, this study explores an effective price presentation strategy to mitigate choice overload due to a large assortment size of price options in the context of hotels. The findings of the experimental design study suggest that the number of categories that distinguish and organize price options positively affects consumers' perceived decision difficulty and consequent decision satisfaction when a large assortment size of price options is provided. This research extends the understanding of the effect of variable pricing on consumers' responses and provides marketers with guidance on how to manage variable pricing and its price presentation format.     

Competition and lodging room rates

Though an important component of commerce and tourism, the accommodation industry has received little economic analysis, particularly in terms of predictive modeling. This paper develops an empirical model of pricing in the lodging industry based on traditional microeconomic price theory. Additionally, three questions are addressed: Do establishments with low occupancy rates tend to raise price to increase revenues, or lower price to increase business? Which approach should they choose? How much competition exists in the industry?     

饭店收入管理方法最新研究分析

收入管理是饭店业提高收益的重要方法。本文通过回顾国内外饭店收入管理研究状况,着重对饭店收入管理方法的六大研究内容：定价政策、客房存量控制、计算机收入管理系统研究、收入管理决策的最优化、细分市场收入贡献分析和收入管理绩效评估的研究进展、热点与不足及发展趋势进行了评述,并对我国饭店业收入管理应用提出了建议。     

An analysis of asymmetry in dynamic pricing of hospitality industry

The paper analyzes the influence of changing tourist arrival on various hotel performance measures related to prices, such as price charges per room, revenue per available room, occupancy rate, and total revenue using price dynamics of Oslo as a case. It also measured whether there is an asymmetric relation between the above performance measures in response to the increase and decrease of tourist arrival. While the presence of a significant long-run relationship between tourist arrival and revenue per available room, capacity utilization, and total revenue has been confirmed, it was found that the price per room does not have such a relationship, and it suggests that the price adjustments are made only on short-run considerations. Another interesting observation is that the magnitude of asymmetric influence is high for revenue per available room and occupancy rate when tourist arrival declines, compared to the corresponding magnitude when tourist arrival increases. These findings indicate that there lies a scope to improve the dynamic pricing model currently being followed.     

The relationship between price paid and hotel review ratings: Expectancy-disconfirmation or placebo effect?

Whilst there is extant research focusing on the link between hotel reviews and pricing there is scant attention paid to the impact of pricing on hotel review ratings. This paper presents a large scale study based on a novel dataset of more than 44,000 guest review ratings linked to the prices paid for rooms of an European hotel group. Through applying a panel regression analysis we reveal that expectancy-disconfirmation is generally stronger than the placebo effect and higher prices have a negative effect on review ratings, not only when assessing perceived value for money but also when evaluating perceived quality. We identify the trip and guest characteristics which impact on the price-review relationship. Findings provide hotel managers with key quantitative information for simultaneously calibrating quality and revenue targets. Substantial implications include an integrated approach for segmentation as a route to better manage pricing, revenue optimization and reputation.     

Dynamic pricing and revenues of Airbnb listings: Estimating heterogeneous causal effects

This paper investigates the extent to which the implementation of intertemporal price discrimination affects Airbnb listings’ revenue. We found that on average, a price surge (i.e., increasing the price as we approach the date of service consumption) has an adverse effect on revenue. However, the magnitude of such effect exhibits significant heterogeneity among listings. Through the application of generalized random forests, a causal machine learning technique, we identify exacerbating and moderating treatment modifiers and shed light on the listing dimensions that cause price surges to be particularly detrimental for hosts’ revenues.     

Ticket prices and revenue levels of tourist attractions in China: Spatial differentiation between prefectural units

Ticket pricing is a key issue for tourism research in China. Owing to regional differences, a unified nationwide price reduction strategy for tourist attractions would be inappropriate for China. To assist in regional ticket pricing decisions, this study uses ArcGIS spatial analysis methods to analyze the spatial differentiation of ticket prices and revenue levels between prefectural units, using 2017 data from 9450 A-grade tourist attractions. The results reveal prominent characteristics of spatial differentiation in tourist attractions’ average ticket prices, as well as in the proportion of their revenue from ticket sales, between prefectural units. Ticket prices are generally low in north China and high in south China; meanwhile, the proportion of ticket revenue is generally high in east China and low in west China. The factors influencing such spatial differentiation are tourism resources, local socio-economic conditions, and the management of tourist attractions. The findings help stakeholders to make differentiation strategy.     

Competitive revenue management for fixing quota and price of hotel commodities under uncertainty

This article develops an artificial neural network (ANN) based forecasting model using the past profit records of hotel commodities. Based on forecasting, hotel commodities are categorised into two kinds: ones that push up the revenue, and others, which pull it down. Thereafter, long and short term goals are formulated for fixing quota and proper revenue management under uncertainty. For long term goal, analytical network process (ANP) framework is adopted to establish interrelationships among the factors using DEMATEL methodology. Risk adjusted maximum expected profit is employed for short term goal. Subsequently optimal numbers of commodities are obtained using a fuzzy goal programming approach, and favourable price of the individual commodities is determined keeping the price elasticity as one. Finally, a comparison is made between the respective revenue generated with the new quota and price from the proposed revenue maximization model, and that of the old practised price and quota. The paper demonstrates the superiority of the proposed approach. A case study of a hotel has been taken up to demonstrate the model.     

Price formation in tourism industry branches

To examine the pricing behavior of suppliers of holiday goods and services, a margin approach, originally developed to explain price formation in service industries, has been applied to different sectors of the tourism industry, using Dutch data. The fundamental idea of the margin approach is that both cost and demand factors influence price formation. The specific market situation is supposed to determine the extent to which changes in cost factors can be passed on to consumers. Despite difficulties with the quality of data, the results can be characterized as promising.     

我国旅游景区门票多目标定价机制研究

传统产品定价研究大都从市场供需出发,以利润最大化来设置产品价格.然而景区门票价格是由市场因素和政策因素共同作用形成,景区门票定价不仅要满足景区经营方的利润最优目标,还应符合景区的生态承栽能力和社会福利目标.文章通过建立景区基于利润最优目标、生态承裁力目标和社会福利最优目标模型,证明了当追求利润最大化目标时,景区应该以产业利润最大化来制定门票价格;当景区生态承载能力低于产业利润最优的游客数量时,票价应该根据生态承栽人数来制定;当公共景区基于社会福利最优定价时,完全免费并不一定是社会福利的最优选择.在此基础上,对多目标定价机制进行比较分析,并结合杭州西湖景区案例对多目标门票定价机制进行了动态综合研究.     

Optimal imperfect pricing decision-making: Modifying and applying Nash's rule in a service sector context

This paper aims to demonstrate how a simple rule of thumb can form a basis to offer a rational and consistent approach to pricing decision-making when faced with (partially) unknown demand and cost functions. To this purpose Nash's decision rule (1975) is re-evaluated, modified, and applied in a service product context. The decision rule can provide management with a powerful indicator of the direction in which profit will change as the result of a change in price. It specifies the conditions under which differential pricing or discounting may be (more) profitable. In this way, the rule provides a basis for a more competitive business pricing policy. The modification to Nash's rule demonstrates that pricing can benefit from quantitative techniques which are comparatively straightforward to understand and apply. It reduces uncertainty by specifying the required elasticity of demand necessary to make change in price worthwhile. With this rule, managers have an additional tool to evaluate potential price changes in the context of particular market circumstances. The paper concludes by explaining how Nash's applied and modified rule provides an original and rational methodology for exploring whether discounting is a suitable pricing strategy for service businesses with high variable costs and inelastic demand patterns.     

Determinants of revenue per available room: Influential roles of average daily rate,demand, seasonality and yearly trend

Determining price per room to be charged to customers is an important decision to be taken by hotel management. Hotels frequently change their room rates based on the demand of room, occupancy rate, seasonal pattern, and strategies undertaken by other hotels on pricing. We formulated four models to analyse how various influencing variables, such as hotel price, demand, yearly trend and monthly seasonality influence hotel revenue per available room (RevPar). To analyse a case, we used monthly accommodation statistics for Sweden taken for Swedish Agency for Economic and Regional Growth and Statistics from January 2008 to July 2017. We carried out data analysis using both multiple regression and Multivariate Adaptive Regression Splines (MARS) model and found that application of MARS can help establishing a nonlinear relationship of RevPar with other determining variables in a superior way. We also proposed the possibility of developing a better forecasting model using MARS.     

Do price promotions drive consumer spending on luxury hotel services? The moderating roles of room price and user-generated content

Price promotion, as price information, and user-generated content (UGC), as non-price information, play an important role in generating luxury hotel revenue. This study empirically investigates how price promotion influences actual consumer spending on luxury hotel services except room price, by considering the contingency role of room price and volume and valence of UGC. Combined data of daily settlements and Tripadvisor customer reviews of a regional luxury hotel chain are used for the analyses. The results indicate that, overall, price promotion negatively influences consumer spending on luxury hotel services and its negative effect is strengthened when the room is higher priced or the valence of UGC is high. Furthermore, a larger volume of intrinsic attribute-related UGC–amenity and location–with price promotion leads to more consumer spending than a larger volume of extrinsic attribute-related UGC–food and staff. The findings provide hotel managers with important insights into pricing and UGC management.     

Online upselling: Moving beyond offline upselling in the hotel industry

The purpose of this study is to understand how online upselling is used in the hotel industry as a part of revenue management strategy. This study used a convergent parallel mixed method design where qualitative and quantitative data were collected in parallel, analyzed separately, and then merged. Study 1 took a qualitative approach, exploring how online upselling programs can provide additional value over offline upselling and traditional revenue management practices. Study 2 adopted a quantitative approach to analyze customers’ bidding patterns for superior room categories through secondary data. Findings indicate that an omni-channel approach to upselling can tackle the fragmented nature of multichannel upselling communications to provide customers with consistent information and experience across these channels. Through an omni-channel approach, the hotel industry can develop personalized and streamlined upselling strategies.     

A stochastic cost efficiency analysis of international tourist hotels in Taiwan

The one-stage stochastic frontier approach (SFA) is used in this study to simultaneously estimate cost efficiency scores and factors of cost inefficiency for 66 international tourist hotels in Taiwan during 1997–2006. An SFA model with three outputs and three inputs is defined. The three outputs are room revenue, food and beverage revenue, and other operation revenue while the three inputs are price of labor, price of other operation, and price of food and beverage. This model also takes into account five environmental variables, including dummy variable of the hotels located in non-metropolitan area, dummy variable of chain hotels, the number of tourist guides, the minimum distance from each hotel to Taoyuan international airport and the minimum distance from each hotel to Kaohsiung international airport. Empirical results show that international tourist hotels in Taiwan are on average operating at 91.15% cost efficiency. All nominal variables are transformed into real variables in 1997 prices by GDP deflators. Chain systems, tourist guides, and international transportation can significantly improve the cost efficiency of international tourist hotels in Taiwan.     

Roles of passengers' engagement memory and two-way communication in the premium price and information cost perceptions of a luxury cruise

The luxury cruise line is considered to be one of the most promising target markets because of its tremendous growth potential. However, because the service is expensive, the establishment of an effective price strategy is necessary. This study empirically demonstrates cruise passengers' engagement roles in the perception of two-way communication with employees, which relates to passengers' price and information cost perceptions. Passengers' engagement is measured in terms of five dimensions: identification, enthusiasm, attention, absorption, and interaction. Structural equation modeling is used based on questionnaire data. The findings of this study suggest an alternative price strategy to alter passengers' price perceptions.     

Selecting a cruise port of call location using the fuzzy-AHP method: A case study in East Asia

Increasing income levels and greater leisure time give people the opportunity to pursue new types of tourism ventures. As one of the fastest growing areas in the leisure travel industry, the cruise industry is increasing rapidly. Due to the benefits that cruise tourism brings to each port of call and the hinterland, it is necessary to be able to analyze the factors that affect cruise lines' port selections. The main objective of this paper is to identify the main factors motivating cruise lines to select specific ports of call and to provide information to port operators that will enable them both to improve their management strategies and to attract more cruise ships, thereby contributing to the revenues of the port and regional economy.