Pricing in the hotel and catering sector

Summary A model explaining gross margins in the hotel and catering sector is developed. A cost-mark-up model for the retail sector is used as a starting point. Although we have to reject the hypothesis of mark-up pricing in the hotel and catering sector, the model proves a useful instrument to discriminate between such influences as sales composition, costs and their various components, scale and demand conditions on price setting. Our empirical evidence stems from the Dutch hotel and catering sector (1977 through 1981).We are extremely grateful to the Central Bureau of Statistics (particularly the Department of Interior Trade and Commercial Services) in Voorburg, The Netherlands for permitting the use of their data under certain secrecy conditions.