Competitive Pricing €“ Ways To Maximise Hotel Revenue

Revenue management research literature has emphasized the need of tracing the prices of competitors. To stay competitive and achieve higher revenue per available room, hotels should keep track of the pricing behaviour of their competitors. This study investigates the relationship between pricing strategy and hotel’s position in RevPAR, and occupancy relative to their competitive sets. The objective of this research is to assess the possibilities of competitive pricing in Croatian hospitality industry and examine the effect of competitor pricing levels on relative hotel revenue, to determine whether raising or lowering prices relative to the competition contributes more to RevPAR growth. The sample in this research refers to the period of 5 years (2014-2018), and the source is Croatian hospitality industry Benchmarking. According to previous research (Enz, Canina & van der Rest, 2015), variables used are market share indicators and panel data analysis. The obtained results underline the importance of price positioning in relation to competitors and its possible influence on the result achieved. The research results show that hotels that set their prices higher than their competitors as a result have lower level of occupancy but in the same time can experience higher RevPAR. It confirms the importance of strategic price positioning and applying the competitive pricing as a very important instrument of revenue management.