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Identification of Consumer Behavior Based on Price Elasticity: A Case Study of the Prague Market of Accommodation Services

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  • Martin Petricek

    (Department of Economy and Economics, Institute of Hospitality Management in Prague, 181 00 Prague, Czech Republic)

  • Stepan Chalupa

    (Department of Information Technologies, University of Hradec Kralove, 500 03 Hradec Kralove, Czech Republic)

  • Karel Chadt

    (Department of Marketing, Institute of Hospitality Management in Prague, 181 00 Prague, Czech Republic)

Abstract

The article deals with customer behavior in the market of accommodation services. The main purpose of this article is to identify tourist behavior using their sensitivity to changes in the price, based on the data from 2011 to 2018. The results can help to understand the booking behaviors of tourists in the long term period, identify specific situations, and to improve the application of revenue management. Using simple log-log regression analysis, the daily performance data of 103 Prague hotels were analyzed, and the coefficient of price elasticity of demand was identified for various timeframes: low and high seasons, summer months, weekends and weekdays, and individual years. The results show that the coefficient of price elasticity of demand is decreasing. In the low season, the low price sensitivity is caused mainly by the high proportion of the non-yieldable leisure group segment, where fixed rates are created for tour operators more than a year in advance. In the high season, Giffen’s paradox was identified in 2016 and shows the situation of customers expecting further growth of room rates. The Giffen paradox was identified only on specific dates of the year and was confirmed by year-to-year growth of the Average Daily Rate.

Suggested Citation

  • Martin Petricek & Stepan Chalupa & Karel Chadt, 2020. "Identification of Consumer Behavior Based on Price Elasticity: A Case Study of the Prague Market of Accommodation Services," Sustainability, MDPI, vol. 12(22), pages 1-14, November.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:22:p:9452-:d:444584
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