Room Rate Patterns and Customers' Propensity To Book a Hotel Room

Abstract

Price-sensitive travelers often access hotels' and intermediaries' Web sites multiple times before they travel. Due to revenue management practices, these deal-seeking consumers are likely to observe (or be quoted) room rates that change considerably over time. This study's findings indicate that the issue of price changes over time is more complex than the current discussion framework about last-minute deals and price integrity suggests. It demonstrates that the room rate change pattern consumers observe while searching for a deal affects their propensity to book. Exploring decision and pricing theory elements, the study demonstrates empirically that through the internal reference price, the price patterns affect consumers' room rate expectations and consequently affect their propensity to book. These findings underscore the noteworthy impact of the Internet-induced reduction of the providerconsumer information gap on the effectiveness of revenue management policies.

Bridging the gap: An examination of the relative alignment of hospitality research and industry priorities

“…For example, internet marketing and distribution research was largely focussed on understanding the implications for this new marketing initiative from either a customer perspective (e.g., impact of website design - Fam et al, 2004;Baloglu and Pekcan, 2006;Law and Hsu, 2006; impact of online social forums - Vermeulen and Seegers, 2008;Ye et al, 2008;Dwivedi et al, 2007) or from an operator's perspective (e.g., on-line pricing and distribution strategies - Gazzoli et al, 2008;Chen and Schwartz, 2008;Dabas and Manaktola, 2007;Law et al, 2007; utilisation of emarketing tools - Murphy and Kielgast, 2008;O'Connor, 2008;Schmidt et al, 2008). Given its relative infancy in general business practice, most of the corporate social responsibility (CSR) hotel research has been focussed on current practices (e.g., Henderson, 2007;Holcomb et al, 2007;Chan, 2008) or the link between CSR and hotel performance (e.g., Garcia Rodriguez and del Mar Armas Cruz, 2007;Lee and Park, 2008).…”

The exploration of hotel reference prices under dynamic pricing scenarios and different forms of competition

“…Chen and Schwartz (2008) have underlined that price structures and room rate change patterns affect consumers' room rate expectations and thus their propensity to book. Referring to the two aspects we tested, people tend to overestimate lower prices in forming their reference point and are influenced by early prices, which act as a milestone in the determination of the reference price.…”

The search for the best deal: How hotel cancellation policies affect the search and booking decisions of deal-seeking customers

“…Previous studies indicate that in advanced-booking situations, deal-seeking customers' willingness to book a hotel room is affected by occupancy information (Chen and Schwartz, 2006), room rate patterns (Chen and Schwartz, 2008b), and the number of days before their check-in date (Chen and Schwartz, 2008a). This study further demonstrates that not only the customers' willingness to book, but also their search behavior, is affected by cancellation policies.…”