Do competitive strategy effects vary across hotel industry cycles?

We use metropolitan-level panel data of international tourist hotels (ITHs) in Taiwan to examine whether competitive pricing, quality and advertising effects differ across two business cycle phases of the Taiwanese hotel industry. Following Chen et al.’s (2014. Tourism Econ. 20 (3), 655) conclusion, the Taiwanese hotel industry over the period 2000 to 2010 is divided into two regimes: a high-growth regime (2007–2010) and a low-growth regime (2000–2002 and 2004–2006). We adopt the approach proposed by Enz et al. (2009. Cornell Hospitality Q. 50 (3), 325) on competitive strategies by computing the difference between the value of each hotel and its competitive set on merits of average daily rate, service quality and advertising expenditure. The empirical results indicate that: (1) Competitive pricing strategy has a positive influence on ITHs’ room revenue per available room (RevPar) in the high-growth regime (HGR). (2) Competitive pricing and service quality strategies are positively associated with RevPar in the low-growth regime (LGR). Moreover, service quality improvements relative to the competitive set lead to an increase in occupancy for ITHs in the LGR.     

How demand uncertainty and market concentration affect long-term price instability

The object of this paper was to investigate the long-term influences of demand uncertainty and market concentration on price instability in the hotel industry. We applied 1996–2008 price and room revenue data collected by Taiwan's Tourism Bureau to test the following two hypotheses: (1) demand uncertainty is negatively associated with price instability in the hotel industry; (2) the market concentration is negatively associated with hotel price instability. We constructed a two-stage price instability model and the estimate results produced the following two findings: First, the uncertainty in room demand significantly contributed to the price instability. Second, the effects of market structure on price instability were heterogeneous across different levels of price instability distribution. Notably, when the distribution of price instability moved from lower to higher quantiles, the relationship between market concentration and price instability altered from positive to negative.     

A simultaneous equations model of the hotel room supply and demand in Hong Kong

The purpose of the study is to identify the important factors that influence the hotel room supply and demand, and their overall impact on the Hong Kong hotel industry. Nineteen years of time series data are used and a simultaneous equations econometric model is employed. The overall goodness-of-fit of both demand and supply models is very high, suggesting high predictive power. Empirical results indicate that “hotel room price” and “tourist arrivals” are significant factors driving the demand for hotel rooms. In addition, “1990–91 recession” and “the 1997–98 Asian financial crisis” had a significant negative impact on the demand for hotel rooms in Hong Kong. At the same time, “hotel room quantity demanded”, “room occupancy rate”, “last period's room price”, “labor cost”, “last period's average price of Grade A private offices”, and “the Asian financial crisis” all have a significant impact on room price in the short run.     

The influence of uncertain demand on hotel capacity

We examine the effects of uncertain demand on hotel capacity using the operation data of international tourist hotels in Taiwan from 1996 to 2008. Abel (1983) argued that demand uncertainty leads to an increase in the capacity of a firm if uncertain demand takes the form of output price uncertainty for the competitive market. We empirically test Abel's model. Our findings support the demand uncertainty hypothesis in Abel's model. Moreover, our results indicate that effective management of hotel capacities is a more important issue for managers of medium-sized hotels than for small or large-sized hotels in the Taiwanese hotel industry.     

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.     

How does hotel pricing influence guest satisfaction by the moderating influence of room occupancy?

Whether the product price increases customer satisfaction or rather decreases it has been actively debated for some time. A non-linear correlation between the hotel price and guest satisfaction, explored empirically in this paper, implies that the two phenomena are actually not inconsistent with one another At the low price level, room price and food and beverage (F&B) price leads to an increase in guest satisfaction whereas the high price level could have just the opposite effect The results suggests an inverse U shaped relationship between price level and guest satisfaction On the other hand, the room price guest satisfaction link could be affected by the moderating influence of room occupancy to be a U shaped function This paper reports results from a study on the influence of hotel pricing on guest satisfaction in the context of room products and F&B products in Taiwanese international tourist satisfaction It is found that the hotel pricing has a quadratic effect on guest satisfaction     

Big data hedonic pricing: Econometric insights into room rates’ determinants by hotel category

This research uses a big dataset of online prices published on Booking.com by three-, four- and five-star hotels located in Madrid (Spain). Data is broadened by other sources, resulting in a rich set of context-, hotel- and offer-based variables. This research aims to determine the impact of these variables on the online room prices set by one representative sample, featuring the total pricing behaviour as well as per hotel categories. The variables considered, their extent and the insight per category represent a novelty and complement the literature on demand forecasting and hedonic pricing, enabling the improvement of optimisation techniques. The models, based on regression analysis with random effects, reveal a significant impact of the variables on room prices and a clearly distinct behaviour for five-star hotels. This research contributes to the scientific community and practitioners by showing the pricing dynamics behaviour of an important urban destination by star rating.     

Pricing determinants in the hotel industry: Quantile regression analysis

Due to the skewed distribution of hotel prices, quantile regression provides a more flexible and complete characterization of the determinants of the hotel prices at the higher and lower tail of the distribution. This study applies quantile regression approach to investigate the major determinants of hotel room pricing strategies. The ordinary least square regression is also used for comparative purposes. The data are drawn from 58 international tourist hotels in Taiwan and average room rate (ARR) is used as the proxy of hotel room price. The results of OLS and quantile regression share common characteristics but also have differences in some aspects. The OLS results reveal that number of rooms, hotel age, market conditions and number of housekeeping staff per room are the main attributes of hotel room rate. The quantile regression results further demonstrate that room number and the number of housekeeping staff per guest room do not significantly influence hotel price at the low price quantile. Hotel age and market conditions are only significant determinants in high-price category. Additionally, for the high-priced quantile hotels, the proportion of foreign individual travellers positively and significantly influences room price. The empirical results can help hoteliers in shaping investment and pricing 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.     

How do advertising expenditures influence hotels’ performance?

Existing studies have shown a positive relationship between advertising and hotel room revenue. However, it is not clear through which channel advertising affects hotel revenue. We contribute to the literature by showing that advertising has a significant positive impact on hotel room price, but not on room occupancy. Thus, advertising affects room revenues through room price, not quantity demanded.     

A room with a view—A valuation of the Mediterranean Sea view

Aesthetic view is one of the ecosystem services of the Mediterranean Sea which can be estimated using price differences in the hotel market. Hotels situated on the Mediterranean Sea charge higher prices for a room with a sea view than for a room without it. The value of this view in 10 major Mediterranean regions was estimated in this paper using a hedonic price method. Data on 2819 hotel rooms in high season and 2406 rooms in the low season were collected from Booking.com and fixed effects regression was used to estimate the model coefficients. Hotel room prices were found to be higher by about 10% for a room with a view than for one with no view specification. No significant difference was found between regions or season. These findings lend support to the fact that the view of the Mediterranean is equally valued in all regions.     

The effects of beach characteristics and location with respect to hotel prices

This paper measures the effects of beach characteristics and hotel location with respect to the beach on sun-and-beach hotel prices by using a well-established hedonic perspective. The paper’s main results are that, after controlling for the relevant variables, location in front of a beach increases the price of a room in costal hotels of Catalonia by a figure between 13 and 17%, and that a Blue Flag increases the price by around 11.5%. The effects on hotels’ prices of other beach characteristics (such as beach length, width, sand type or beach services) are also estimated. With these estimates, the paper ranks beaches according to their characteristics and provides a setting to assess different policies regarding beaches from the point of view of hotels, such as regeneration, maintenance or achieving a Blue Flag award.     

The moderating role of context in the effects of choice attributes on hotel choice: A discrete choice experiment

This study used discrete choice modeling to identify the moderating role of context in the effects of cognitive, affective, and sensory attributes on hotel choice. To evaluate a hotel consumer's choice for attributes in a different choice context (leisure vs. business), a stated preference experiment based on D-optimal design was conducted using both a multinomial logit (MNL) model and a random parameter logit (RPL) model. The results show that while leisure travelers' choices for family vacation trips were more influenced by price and overall atmosphere than were business travelers', business travelers put an emphasis on room quality and comfort when on a business trip alone. The study demonstrates the trade-offs made by leisure and business travelers when choosing a hotel through discrete choice modeling. The findings provide hotel managers with important insights and implications in terms of target segmentation, product development, and marketing communication strategy.     

Data Mining For Hotel Occupancy Rate: An Independent Component Analysis Approach

The recent global financial crisis and the threat of a worldwide H1N1 influenza epidemic have greatly affected the tourism and hospitality industries around the world. Both hospitality practitioners and researchers are interested in finding analytical methods that enable forecasts to be made of hotel room demand under the uncertain conditions likely to affect the industry. In this article, a novel data mining technique called independent component analysis (ICA) is proposed to establish the major factors determining the hotel occupancy rate in Hong Kong. Then, extension of the model is suggested, incorporating these factors to decompose hotel occupancy rates and examine the effect of each factor on the hotel occupancy rate. Empirical findings show that outbreaks of infectious diseases, economic performance, and service price were the major determinants of the hotel occupancy rate in Hong Kong over the period studied.     

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.     

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.     

The supply of hotel rooms in Queensland,Australia

Most studies emphasize the demand for tourism goods and services. By contrast, this paper examines the supply decisions of hotel and motel owners with respect to guest rooms. This decision is hypothesized to depend upon earnings per room, room occupancy rates, and the rate of interest. The reaction of hoteliers to changes in the values of these particular variables is modelled econometrically for the 1986–94 period in the three tourism regions of the Gold Coast, Whitsunday, and Cairns of Queensland in Australia. The study shows that, over this investigation period, the supply responses were very different among the three regions.     

Which hotel guest segments reuse towels? Selling sustainable tourism services through target marketing

ABSTRACT

This paper reviews and evaluates the wide range of supply and demand side measures employed and tested to reduce the environmental impacts of tourist accommodation. It focuses on the importance of understanding market segments and their pro-environmental behaviour by exploring the personal and travel characteristics significantly associated with pro-environment beneficial change, empirically investigating hotel guest characteristics associated with higher towel reuse. Towel use per day, per room, is modelled according to the number of adults in the room, the number of children, and the type and origins of guests. Observed actual towel use by 204 travel parties spending 480 nights in a four-star hotel in Slovenia reveals key personal and travel characteristics of hotel guests which are predictive of towel reuse: their country of origin, booking methods used, being a business traveller and not being a family. Results point to a-priori market segments which could be given booking preference in periods of high demand to reduce hotel environmental footprints. Results also point to promising leverage points for interventions designed to modify the behaviour of hotel guests on site. The approach and methodology used could be applied to marketing pro-environmental concepts more widely across other sustainable initiatives.     

The impact of the SARS outbreak on Taiwanese hotel stock performance: An event-study approach

The severe acute respiratory syndrome (SARS) outbreak in 2003 weakened the Taiwanese economy. The tourism industry suffered the most, experiencing the highest stock price decline (approximately 29 percent) within a month of the SARS outbreak. This research examined the effect of the SARS epidemic on Taiwanese hotel stock price movements using an event-study approach. Seven publicly traded hotel companies experienced steep declines in earnings and stock price during the SARS outbreak period. On and after the day of the SARS outbreak, Taiwanese hotel stocks showed significantly negative cumulative mean abnormal returns, indicating a significant impact of the SARS outbreak on hotel stock performance. Empirical findings could be used to prepare businesses for the similar epidemics, such as a deadly bird-flu epidemic.     

Optimizing Room Capacity and Profitability for Hong Kong Hotels

This study estimates optimal guestroom capacity for the Hong Kong hotel industry during 2010–2013 using a single-period inventory model. Using Hong Kong hotel operational data for the period 2000–2009, we identify an issue of serious overcapacity of Hong Kong hotels for 2010–2013, the severity of which ranges from 30.6 to 40.7% above the optimal hotel guestroom counts derived from our study. We further estimate an optimal advertising budget as a percentage of total revenue (3.78%) in maximizing profitability. Attention is called for stakeholders to carefully reexamine existing and future hotel development plans and work on pushing up future room demand. The implications of our study are also discussed.