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Evaluation of best price clauses in online hotel bookings

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  • Hunold, Matthias
  • Kesler, Reinhold
  • Laitenberger, Ulrich
  • Schlütter, Frank

Abstract

We analyze the best price clauses (BPCs) of online travel agents (OTAs) using meta-search price data of nearly 30,000 hotels in different countries. We find that BPCs influence the pricing and availability of hotel rooms across online sales channels. In particular, hotels publish their offers more often at Booking.com when the OTA does not use the narrow BPC, and also tend to promote the direct online channel more actively. Moreover, the abolition of Booking.com’s narrow BPC is associated with the direct channel of chain hotels having the strictly lowest price more often.

Suggested Citation

  • Hunold, Matthias & Kesler, Reinhold & Laitenberger, Ulrich & Schlütter, Frank, 2018. "Evaluation of best price clauses in online hotel bookings," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 542-571.
    • Handle: RePEc:eee:indorg:v:61:y:2018:i:c:p:542-571
    DOI: 10.1016/j.ijindorg.2018.03.008
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    Cited by:

    1. Hunold, Matthias & Kesler, Reinhold & Laitenberger, Ulrich, 2018. "Hotel rankings of online travel agents, channel pricing, and consumer protection," ZEW Discussion Papers 18-059, ZEW - Leibniz Centre for European Economic Research.
    2. Daniel Garcia & Juha Tolvanen & Alexander K. Wagner, 2022. "Demand Estimation Using Managerial Responses to Automated Price Recommendations," Management Science, INFORMS, vol. 68(11), pages 7918-7939, November.
    3. Sean Ennis & Marc Ivaldi & Vicente Lagos, 2023. "Price-Parity Clauses for Hotel Room Booking: Empirical Evidence from Regulatory Change," Journal of Law and Economics, University of Chicago Press, vol. 66(2), pages 309-331.
    4. Abdullah F. Alnaim & Abu Elnasr E. Sobaih & Ibrahim A. Elshaer, 2022. "Measuring the Mediating Roles of E-Trust and E-Satisfaction in the Relationship between E-Service Quality and E-Loyalty: A Structural Modeling Approach," Mathematics, MDPI, vol. 10(13), pages 1-15, July.
    5. Matthias Hunold & Reinhold Kesler & Ulrich Laitenberger, 2020. "Rankings of Online Travel Agents, Channel Pricing, and Consumer Protection," Marketing Science, INFORMS, vol. 39(1), pages 92-116, January.
    6. Mantovani, Andrea & Reggiani, Carlo & Broocks, Annette & Duch-Brown, Nestor & Ma, Peiyao, 2022. "The Price Effects of Banning Price Parity Clauses in the EU: Evidence from International Hotel Groups," TSE Working Papers 22-1371, Toulouse School of Economics (TSE).
    7. Joan Calzada & Ester Manna & Andrea Mantovani, 2022. "Platform price parity clauses and market segmentation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 609-637, August.
    8. Bourreau, Marc & Manenti, Fabio M., 2023. "Selling cross-border in online markets: The impact of the ban on geoblocking strategies," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    9. Carlotta Mariotto & Marianne Verdier, 2020. "Platform–merchant competition for sales services," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 29(4), pages 834-853, October.
    10. Sviták, Jan & Tichem, Jan & Haasbeek, Stefan, 2021. "Price effects of search advertising restrictions," International Journal of Industrial Organization, Elsevier, vol. 77(C).
    11. Danial Asmat & Chenyu Yang, 2019. "An Empirical Analysis of Minimum Advertised Price Restrictions," Working Papers 19-07, NET Institute.
    12. Marin-Pantelescu Andreea, 2018. "Improving Hotel Services in Romania Using Marketing Campaigns," International Conference on Marketing and Business Development Journal, The Bucharest University of Economic Studies, vol. 1(2), pages 56-68, December.
    13. Hongbo Tan & Tian Su & Xusheng Wu & Pengzhan Cheng & Tianxiang Zheng, 2024. "A Sustainable Rental Price Prediction Model Based on Multimodal Input and Deep Learning—Evidence from Airbnb," Sustainability, MDPI, vol. 16(15), pages 1-22, July.
    14. Maruyama, Masayoshi & Zennyo, Yusuke, 2020. "Platform most-favored-customer clauses and investment incentives," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    15. Wals, Francisca & Schinkel, Maarten Pieter, 2018. "Platform monopolization by narrow-PPC-BPG combination: Booking et al," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 572-589.
    16. Morgane Cure & Matthias Hunold & Reinhold Kesler & Ulrich Laitenberger & Thomas Larrieu, 2022. "Vertical integration of platforms and product prominence," Quantitative Marketing and Economics (QME), Springer, vol. 20(4), pages 353-395, December.
    17. Song, Boqian & Li, Michael Z.F. & Zhuang, Weifen, 2021. "Dynamic channel control and pricing of a single perishable product on multiple distribution channels," European Journal of Operational Research, Elsevier, vol. 288(2), pages 539-551.
    18. Andrea Mantovani & Claudio Piga & Carlo Reggiani, 2019. "Much ado about nothing? Online platform price parity clauses and the EU Booking.com case," Economics Discussion Paper Series 1909, Economics, The University of Manchester.
    19. Shen, Bo & Wright, Julian, 2019. "Why (don’t) firms free ride on an intermediary’s advice?," International Journal of Industrial Organization, Elsevier, vol. 64(C), pages 27-54.
    20. Cazaubiel, Arthur & Cure, Morgane & Johansen, Bjørn Olav & Vergé, Thibaud, 2020. "Substitution between online distribution channels: Evidence from the Oslo hotel market," International Journal of Industrial Organization, Elsevier, vol. 69(C).
    21. Mantovani, Andrea & Piga, Claudio A. & Reggiani, Carlo, 2021. "Online platform price parity clauses: Evidence from the EU Booking.com case," European Economic Review, Elsevier, vol. 131(C).

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    More about this item

    Keywords

    Best price clauses; Online hotel booking; MFN; OTA; Vertical restraints;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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