Strategic and tactical price decisions in hotel revenue management
Institution:
1. University of Piemonte Orientale “A. Avogadro”, Department of Economics and Business, Via Perrone 18, 28100 Novara, Italy;2. Bournemouth University, Faculty of Management, Fern Barrow, Talbot Campus, Poole, Dorset BH12 5BB, United Kingdom;1. School of Tourism and Hospitality Management, Temple University, Philadelphia, PA 19122, USA;2. Department of Geography, University of Florida, Gainesville, FL 32611, USA;3. Rosen College of Hospitality Management, University of Central Florida, Orlando, FL 32819, USA;1. School of Tourism and Hospitality Management, Temple University, 1810 N. 13th Street, Philadelphia, PA 19122, United States;2. College of Hospitality and Tourism Management, Sejong University, 98 Gunja-Dong, Gwangjin-Gu, Seoul 143-747, Republic of Korea;1. Rosen College of Hospitality Management, University of Central Florida, 9907 Universal Blvd., Orlando, FL 32819, United States;2. Hospitality Business Management, Alfred Lerner College of Business & Economics, University of Delaware, 14 W. Main Street, Raub Hall, Newark, DE 19716, United States;3. Dept. of Hospitality & Tourism Management, Isenberg School of Management, University of Massachusetts, Flint Lab - 90 Campus Center Way, Amherst, MA 01003, United States;1. Bournemouth University, Department of Tourism and Hospitality, Fern Barrow, Poole, BH12 5BB Bournemouth, UK;2. IULM University, Department of Economics and Marketing, Carlo Bo 1, 20143 Milan, Italy;3. Eada Business School, Department of Marketing, Aragó 204, 08011 Barcelona, Spain;1. University of Bologna, Department of Statistics, via delle Belle Arti 41, 40126 Bologna, Italy;2. Xenia S.p.A., Via A. Gramsci 79, 66016 Guardiagrele, Italy
Abstract:
Dynamic pricing techniques allow using a number of variables in a tactical way compared to standard catalogue prices. This study merges in a conceptual model the relevance of the tactical and the strategic dimension of these variables, classified according to their tangible, reputational or contextual nature.To empirically validate the hypotheses, a database of 21.596 price observations was retrieved from booking.com. The study presents a hedonic price function, using the Shapley-Owen decomposition of the R-squared to elicit the importance of each group of factors. Further, a hierarchical cluster analysis measures the presence of heterogeneity across operators.The results show that online reputation is gaining importance over the traditional star rating. Despite the tangible variables remain of paramount importance, the findings suggest the relevant role of contextual variables in short-run price variations. The players operating in the tourism and hospitality industries should integrate these findings when designing pricing strategies.
