The effect of idiosyncratic price movements on short- and long-run performance of hotels |
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| Institution: | 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. School of Hotel & Tourism Management, Hong Kong Polytechnic University, Hong Kong, China;2. Griffith Business School Griffith University, PMB 50, GCMC, 9726 QLD, Australia;1. University of Lethbridge, Room S6037, 345 6 Ave SE, Calgary AB T2G 4V1, Canada;2. Hannover, Germany;3. University of Groningen, P.O. Box 800, 9700 AH Groningen, the Netherlands;4. The University of Queensland, UQ Business School, Brisbane, QLD 4072, Australia;1. Department of Food and Beverage Management, Shih Chien University, 70, Da-Zhi St., Taipei, Taiwan, ROC;2. Department of Tourism, Recreation, and Leisure Studies, National Dong Hwa University, No. 1, Sec. 2, Da Hsueh Rd., Shoufeng, Hualien, Taiwan, ROC;3. Graduate Institute of Recreation, Tourism, and Hospitality Management, National Chiayi University, No. 580 Sinmin Rd., Chiayi City 60054, Taiwan, ROC;1. Austrian Institute of Economic Research, WIFO, Austria;2. Statistics Sweden, Sweden;1. LCB Hospitality Management, Sookmyung Women’s University, South Korea;2. School of Hospitality Management, The Pennsylvania State University, U.S.A;3. School of Tourism Management, Sun Yat-sen University, China |
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| Abstract: | It is a common belief that businesses performance should not be evaluated by immediate fiscal returns, but rather based on an extended time horizon. While the literature implies that pricing decisions may exert lagged as well as contemporaneous effects on performance, a limited number of empirical studies have focused on such effects. The current study investigates effects of idiosyncratic price movements on short-run and long-run hotel performance, where idiosyncratic price movements refer to the changes in individual hotels’ room rates unexplained by price competition, product differentiation, and market conditions. By analyzing spatial panel data from the Houston lodging market between 2005 and 2014, we find that idiosyncratic price movements enhance hotel performance in the short-run and that adverse effects followed in the long-run. Findings of the study and implications for practitioners are discussed along with suggestions for future research. |
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| Keywords: | Hotel industry Pricing Hotel performance Random effects spatial panel (RESP) |
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