THE EFFECT OF TIME ON HOTEL PRICING STRATEGY

The aim of the article entitled “The Effet of time on Hotel Pricing Strategy”, by Professor Josep Maria Raya, is to present an empirical model of the dynamics in the room rates in hotels and tourist resorts on the Catalan coast. The increase in Internet distribution of products for tourists is encouraging many companies to implement dynamic pricing policies, price indices changing depending on last minute bookings.

The model used in this case is a hedonic pricing model. This type of model shows howheterogeneous products are composed of various features and the implicit marginal price can be obtained by estimating a model that represents the price of the product in terms of its characteristics. Specifically, this hedonic price model is modeled by estimating a discrete duration model for the probability of occurrence of a change in prices in a particular time and by another model that takes into account the number of times the given price change during the study period. The sample consists of 111 hotels in 3 resorts in the Catalan coast: Calella, Santa Susanna and Lloret de Mar. In each of these hotels, they monitored the price of a double room in the first week of August during the period between the second week of January to the last of July. The dependent variables of the model are the dummy on price changes (changes) and the number of changes. The explanatory variables are the quota of rooms in each hotel in the city’s total, the city where it is located, the category, the week in which the observed price and the initial price.

Model results analyzed show that higher initial price (indicator of a policy of aggressive price discrimination) increases the number of times this price varies during the period (and therefore the likelihood that this price may vary at any time given). Although a larger market share increases the probability of a price change at any given time, this variable does not affect the number of times the price undergoes a change. Finally, as the weeks go by without causing any change in price, the probability of a change in these increases.

 

Dr. Josep Maria Raya

Publicat per Dr. Josep Maria Raya

Dr.Josep Maria Raya es profesor titular de la Escola Universitaria del Maresme (Universitat Pompeu Fabra). Su investigación se centra en economía de la vivienda y economía del turismo.

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