Price Dispersion of Hotel Reservation Online: Evidence from Chinese Megacities

Abstract

Abstract. The traditional view states that an online company should not post two different prices for the same product on the website, given the price transparency of internet. So, price dispersion in e-commerce is weighted toward vanishing, driving online deals to reach higher market efficiency than offline. This, however, hasn't been conclusive. This study is aimed at dealing with different fares concerning the online reservation of hotels and the factors thereof and providing valuable proposals for designing suitable pricing strategies of turnover maximization. This study delineates the price dispersion literature in connection with E-booking commodities and identifies hotel commodities' inherent attributes. This study accumulates online reservation figures through tracking 23 diverse star-level hotels stemming from 11 websites in Beijing, Shanghai and Guangzhou over the time horizon from 2012 to 2013 to perform an empirical analysis of the four explainable variables' effects on fare dispersion through the approach of analysis of variance. The study finds that room type, hotel ranking, geographic location and time horizon are significant drivers leading to dispersive prices, with star level exerting the strongest impact and three other factors not subject to time. In the three sampling municipalities there exists inconsistency in price dispersion of online booking of a hotel's room is, the maximum for Shanghai's hotel reservation while tiny for Beijing and Guangzhou. This study concludes with pointing out limitations and future-researching fields.