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?