The exploration of hotel reference prices under dynamic pricing scenarios and different forms of competition

The reference price, used by consumers to evaluate market prices, has tremendous relevance in dynamic pricing. Reconciling current heterogeneous theories and studies on reference prices, this paper analyzes the impact of hotel price sequences on consumers’ reference prices through a lab and a field experiment. Experiment 1 tests the importance of retrospective price evaluations, while Experiment 2 evaluates the impact of three forms of competition: (i) simultaneous behavior, where firms adjust prices simultaneously; (ii) leader–follower behavior, where one firm acts as the leader; and (iii) independent behavior, where each player takes its rival's strategy as given and seeks to maximize its own profits. The results show that consumers decrease their reference price when competing hotels adjust their prices simultaneously. Relevant managerial implications are drawn for the hospitality industry, which is affected by the presence of online travel agencies that announce the daily rates offered by each competitor.     

Improving revenue performance with third-degree price discrimination in the cruise industry

The leisure cruise industry has enjoyed high levels of growth for nearly five decades due in part to traveler interest in the cruise experience, but also to relatively lower pricing. Although revenue management of cruise fares is now standard practice, there are untapped opportunities to improve yields through data-driven market segmentation and third-degree price discrimination. This paper uses a finite mixture modeling approach to develop, empirically validate, and compare pricing models. By unveiling segments of travelers based on individual attributes, third-degree price discrimination can improve target marketing, the timing and appeal of price discounts, and the matching of variable demand with fixed, though differentiated, room supply. Empirical results from running thousands of simulations with pricing data from one of the world’s largest cruise lines show that the segmentation analysis using third-degree price discrimination can increase fare revenue more than four percent. The modeling approach used in this research extends the emerging literature on revenue management in the cruise industry and offers meaningful managerial implications for advanced pricing tactics and revenue management.     

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.     

Price placebo effect in hedonic consumption

Given the widespread use of premium pricing strategies as a marketing practice, how consumers evaluate premium pricing actions is an interesting issue for both marketing researchers and practitioners. Thus, the objective of this study was to examine perceptions of premium prices and the role of prices, which act as a cue that improves consumers’ experiences in an upscale café setting. Indeed, the results indicated that both price–quality schema and prestige sensitivity were significant factors that induce a positive overall perception of quality at luxury cafés, including coffee, service, and atmosphere. Thus, this study evidences that a price placebo effect exists in hedonic consumption settings. To better understand consumers’ mental accounting based on their income source, the study examined the moderating effect of the origin of the respondents’ income as well. The results revealed that the price tag generates positive consumer responses to café quality.     

Advance booking and hotel price variability online: Any opportunity for business customers?

Is it possible for business customers to effectively adjust their purchasing strategies, as a response to revenue management? We consider daily online best available rates for a panel of 357 hotels in Milan and Rome, up to an advance booking of 29 days.We analyse price trajectories, finding that dynamic pricing strategies with no established trend towards the arrival date are prevalent, with a predominance of decreasing trajectories for lower-scale hotels in Milan during fairs. We show that price levels are explained by a variety of structural determinants. We quantify the effects of advance booking, room quality, services, competition, seasonality and fairs, underlining their different importance on leisure and business destinations. Other features, such as breakfast and refunding options, appear to be used as marketing tools to differentiate rooms, keeping a low pace in price adjustment. Managerial implications are discussed, with reference to both corporate travel departments and hôteliers.     

Why is asset-light strategy necessary? An empirical analysis through the lens of cost stickiness

The widespread trend among firms in the tourism and hospitality industry to adopt an asset-light strategy has enabled the U.S. tourism industry to grow rapidly by shaving off fixed assets. Our paper explores why an asset-light strategy is necessary from the perspective of cost management. Because cost is very “sticky,” meaning it does not change proportionally with changes in revenue, and change in cost is usually lagged, higher cost stickiness leads to lower financial performance. We found that cost stickiness does exist in the tourism and hospitality industry, and an excess of assets is its main determinant. Moreover, we found that management adjusts the amount of assets to reduce the effects of cost stickiness, and these adjustments are much more significant in revenue-declining years. Contributions, limitations, and practical implications are also discussed.     

Effect of Price Change Alert on Perceptions of Hotel Attribute-based Room Pricing (ABP) versus Traditional Room Pricing (TRP)

Aside from marketing information on traditional room rates, hotels and online travel agents (OTAs) are trying a new pricing technique based on the attributes of guestrooms. This research investigates how attribute-based room pricing (ABP) differs from traditional room pricing (TRP) in influencing consumer reactions when consumers receive a price change alert before (vs. after) sales. Through a series of experiments, we found that TRP and ABP result in similar alert attitude, brand attitude, and visit intention for presale price change alert. However, ABP leads to more favorable results for postsale price change alert. We examined the underlying mechanism and found that perceived fairness mediates the effect of pricing strategy on brand attitude, price alert attitude, and visit intention for postsale alert only. This research provides hotel managers and OTA marketers with guidance on when to send either type of price change message to consumers.     

The effect of algorithmic management and workers’ coping behavior: An exploratory qualitative research of Chinese food-delivery platform

While algorithmic management provides new options for organizing service work, it is underexplored in tourism and hospitality research. From food-delivery platforms in China, this qualitative study sources interviews and online reviews to explore the impact of algorithmic management on workers' service behavior and how they cope in response. Our study uncovers an algorithm-human hybrid approach for managing workers, where algorithms and humans function distinctly but complement each other. Algorithmic management influences deliverers’ work either positively, by improving service efficiency, reliability and customer-orientated behavior; or negatively by causing impersonal service behavior, frequent service recovery and extra-role workload. Deliverers employ both problem-focused (i.e., compliance, flexible response and resistance) and emotion-focused (i.e., relief) coping strategies in algorithmic management. In addition to individual resistance, we firstly revealed that deliverers collude with other parties to resist the algorithms. We proposed a conceptual framework that contributes to understanding the dynamic, mutual relationship between algorithms and workers.     

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.     

Does it matter who gets a better price? Antecedents and consequences of online price unfairness for advantaged and disadvantaged consumers

This study examines the moderating role of price inequalities in the antecedents and consequences of perceived price unfairness. We test a moderated mediation model on a sample of 994 consumers exposed to a hotel booking scenario either with an advantaged price (n = 496) or a disadvantaged one (n = 498). Our results show that the mechanisms through which perceived price unfairness is formed and its influence on price satisfaction and WOM significantly differ based on price inequalities. Furthermore, these findings highlight the importance of managing the potential negative consequences of unfair pricing not only for disadvantaged consumers, but also for advantaged ones.     

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。     

The windfall gain effect: Using a surprise discount to stimulate add-on purchases

How can the business maximize revenue while providing discounts? This research suggests that hospitality operators may stimulate add-on purchases with the adoption of surprise discounts. Two experiments investigated factors that influence hospitality consumers’ ancillary spending. Study 1 tested the discount and product type effects on additional spending intentions for a cruise booking. Study 2 identified how the depth of surprise discount and add-on product type influence consumers' add-on purchase decisions for an online hotel booking. The findings indicate that a surprise discount and hedonic items induce consumers' unplanned purchases. A hedonic add-on item is preferred over a utilitarian item when a low discount is offered. Impulse buying mediates the effect of surprise discount and product type on unplanned purchase intentions. This research extends the traditional discount role, by demonstrating that a discount promotion can induce consumers' additional purchases. The findings provide guidance for effective pricing strategies and add-on marketing mix.     

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.     

Pricing of experience products under consumer heterogeneity

An experience is designed to engage the customer and leave a lasting memory. While experience is relevant to a broad array of marketing situations including retailing, leisure, entertainment, and hospitality industries, no prior studies could be located that have assessed the values of experience components to customers, and the pricing implications of such assessments.This study illustrates how an experience offering can be designed and priced using the context of the upscale dining experience. Choice-based conjoint analysis and a hierarchical Bayes methodology are used. A cluster analysis of the part-worth scores reveals three very distinct benefit segments. This study shows how a marketer can: (1) Design and price experience products to match the needs of the different benefit segments. This study also shows how to find optimum price for maximization of revenue and profit. (2) Examine how a product would perform against known competitors, and the potential impact of new competitive entries. (3) Determine own and cross-price elasticities of demand to assess resiliency in the face of price competition.     

The effects of cognitive,affective, and sensory attributes on hotel choice

Over the past decade, experiential marketing has been the focus of many hospitality and tourism studies. Yet the existing literature does not provide experimental evidence of the incremental effects of affective and sensory attributes on the choice of hospitality service and destinations. This study attempts to provide some such evidence by using discrete choice modeling to examine the differential effects of cognitive, affective, sensory attributes on hotel choice. Bayesian D-optimal design based on JMP 8.0 was used to create a discrete choice experiment. Consumer hotel choice was predicted using random parameter logit (RPL) models. These results demonstrate that when customers choose a hotel, they consider not only cognitive attributes (e.g., price, service and food quality, and national brand), but also affective (e.g., comfortable feeling and entertaining) and sensory (e.g., room quality, overall atmosphere) attributes. The results also demonstrate the incremental value of adding affective and sensory attributes to a choice model when compared to a model using only traditional cognitive attributes. The data suggest that hotel managers can effectively differentiate their properties by incorporating affective and sensory attributes in their promotions. Moreover, the findings provide hotel managers with important insights into new product development and marketing communications strategy.     

The Determinant of the Hospitality Industry's Unsystematic Risk: A Comparison Between Hotel and Restaurant Firms

ABSTRACT

Unsystematic risk is accepted as an important factor in stock valuation. Despite the importance, little has been done to study the relationship of unsystematic risk to stock values in the hospitality industry. This study attempted to advance the understanding of financial variables that could be related to unsystematic risk of hospitality firms. Regression models were developed for hotel and restaurant firms, using unsystematic risk as the dependent variable and financial variables as independent variables. The major findings of this study indicate: 1) more profitable hospitality companies have less unsystematic risk, 2) reducing reliance on debt financing could reduce unsystematic risk, 3) the positive relationship between operating leverage and unsystematic risk, suggesting that decreasing operating leverage could mitigate the stock price volatility of hospitality firms, and 4) large hotel and restaurant firms have less unsystematic risk than small firms. This study should help management of hospitality firms incorporate effects of shareholder expectations into their operational decision making as an integral part of long-range financial planning.     

Marketing Strategies for Last-Minute Travel and Tourism

Abstract

Travel and tourism arranged at the “last minute” has become a growing trend among consumers today. Responding to this trend, more and more travel/tourism firms are offering services catering to consumers seeking last-minute travel and tourism opportunities. Yet, clearly, not all last-minute travellers are alike. Variability in last-minute consumer characteristics such as motivations, lifestyles, and benefits sought suggests opportunities for astute marketers and revenue managers to collaborate in further segmenting the last-minute market and developing more effective marketing and revenue management strategies to potentially increase the firms' revenues, profitability, and customer satisfaction. Toward this end, this article evaluates and discusses marketing strategies, marketing mix elements, and segmentation approaches that may be most appropriate for more effective marketing and revenue management in the last-minute travel and tourism market.     

Can corporate social responsibility protect firm value during the COVID-19 pandemic?

The novel coronavirus (COVID-19) pandemic has caused a significant decline in the stock market worldwide, and hospitality companies are experiencing serious financial problems. Protecting and preserving firm value is a critical way of helping hospitality companies survive the crisis. The influence of corporate social responsibility (CSR) on firm value has been widely investigated. However, little is known about the stock price movement following CSR activity adoption during an industrial crisis. Using event study and difference-in-difference method, this study reveals that engaging in CSR activities can increase the stock returns and stakeholder attention of hospitality firms during the pandemic. Community-related CSR has a stronger and more immediate effect on stock returns than customer- and employee-related CSR. Results also indicate that hospitality firms that pursue improved stock market performance during a pandemic can invest in CSR to protect communities, customers, and employees for attracting further stakeholder attention.     

Determinants of radical innovation in clustered firms of the hospitality and tourism industry

Social capital is a key resource encouraging innovation in clustered firms of the hospitality and tourism industry, however it may be influenced by managers perception of market dynamism. This paper analyses the moderator role of ma’rket dynamism perception among the three dimensions of social capital −structural, relational and cognitive- and radical innovation. We conducted an empirical study on a sample of 215 hospitality and tourism firms located in World Heritage Cities of Spain, by considering each city as a cultural tourism cluster. The structural equations analysis shows divergent direct and moderated effects for the dimensions of social capital. Specifically, the negative effect of structural social capital on radical innovation worsens when market dynamism perception is higher. However, market dynamism perception improves the effects of relational and cognitive social capital on radical innovation. The study contributes to the understanding of the antecedents of radical innovation at firm level in the context of cultural tourism clusters.