Dynamic pricing strategies: Evidence from European hotels

Abstract

How much do hoteliers actually make use of dynamic pricing strategies? We collected data on the price of a single room booked in advance (from three months to a single day), from almost 1000 hotels in eight European capital cities. Pricing strategies were analyzed by means of descriptive statistics, box plots and econometric panel data techniques. The empirical results show that the inter-temporal pricing structure primarily depends on the type of customer, the star rating and the number of suppliers with available rooms.

How social comparison influences reference price formation in a service context

“…In the anonymous condition, participants were asked to imagine that the observed prices were prices found while surfing the Internet: The predesigned sequences (see Appendix) are plausible samples of the process described and were presented to the participants in random order. The variations within series are consistent with the use of dynamic pricing in the hoteling industry (Abrate et al, 2012).…”

Role of e-WOM in hospitality market pricing

“…It should be noted that room prices are also influenced by demand [Tellis 1986;Espinet et al 2003;Hung, Shang & Wang 2010;Abrate, Fraquelli & Viglia 2012] and the number of free rooms available [Badinelli 2000;Lockyer 2005b;Bayoumi et al 2013], and that Booking.com is not the only distribution channel that hotels offer for reservations. Guests' expectations of hotels are also affected by hotel class [Zhang, Ye & Law 2011] and the level of online reviews [Vermeulen & Seegers 2009].…”

“…Prices in the tourism market are much more flexible than in other sectors, allowing for easier adaptation to the changing environment ]. The most important factors affecting price volatility in one hotel are number of available rooms [Badinelli 2000;Abrate, Fraquelli & Viglia 2012;Bayoumi et al 2013], time left to the date of booking [Bayoumi et al 2013], competitors' prices [Abrate, Fraquelli & Viglia 2012], length of stay [Bayoumi et al 2013], and other external indicators. Prices are also diversified between distribution channels in order to move the stream of bookings from OTAs to the supplier's website [Toh, Raven & DeKay 2011].…”

Pricing of the tourism product: a tool for entrepreneurs to adapt to a flexible market

“…a target market share, profi t maximization), customer satisfaction, the degree of market competition, the fi rm's position on the market, capacity constraints, classifi cation and grading systems, taxation, perishable nature of tourism products, the seasonality of tourism demand (Dwyer, Forsyth, & Dwyer, 2010). Previous studies about pricing in tourism, as Collins and Parsa (2006), Cassidy and Guilding (2007), Abrate, Fraquelli and Viglia (2012), Zhang, Zhang, Lu, Cheng and Zhang (2011), Papatheodorou, Lei, and Apostolakis (2012, among others, debate the fundamentals of pricing, pricing strategies and the pricing setting tools. Some authors, as Zhang et al (2011) summarize and classify the hotel pricing empirical approaches into three categories, in terms of the methods used, namely consumer behavior, conjoint analysis, and hedonic analysis.…”

“…Based on Schumpeter's early theory of economic development, more recent approaches view entrepreneurship as a promoter of economic development and named innovation the key element for sustaining it (Bull, Thomas, & Willard, 1995). When referring to innovation we don't consider only the component of developing new products and services, but also the stage of developing new strategies in the tourism establishments (Hamel, 2007).…”