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Dynamic Pricing Policies of Hotel Establishments in an Online Travel Agency

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  • Miguel Angel Ropero

Abstract

This article analyses price setting by hotel establishments in the Spanish islands via an online travel agency. To this end, the author collected information on 572 hotels and tourist apartments and estimated the effects of their characteristics and market conditions on the probability that each establishment would increase or decrease prices and on price variations. The results obtained enabled an examination of the effect of competition and product differentiation on pricing policy. According to the results, the higher the quality of the service provided, the greater the probability of a price rise, and the greater its magnitude. Moreover, a greater difference between the set price and the average price of competitors does not affect the probability of lowering prices. The results therefore suggest that product differentiation is an important issue in the hotel industry.

Suggested Citation

  • Miguel Angel Ropero, 2011. "Dynamic Pricing Policies of Hotel Establishments in an Online Travel Agency," Tourism Economics, , vol. 17(5), pages 1087-1102, October.
    • Handle: RePEc:sae:toueco:v:17:y:2011:i:5:p:1087-1102
    DOI: 10.5367/te.2011.0082
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    References listed on IDEAS

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    1. Wedad Elmaghraby & P{i}nar Keskinocak, 2003. "Dynamic Pricing in the Presence of Inventory Considerations: Research Overview, Current Practices, and Future Directions," Management Science, INFORMS, vol. 49(10), pages 1287-1309, October.
    2. Lawrence R. Weatherford & Samuel E. Bodily, 1992. "A Taxonomy and Research Overview of Perishable-Asset Revenue Management: Yield Management, Overbooking, and Pricing," Operations Research, INFORMS, vol. 40(5), pages 831-844, October.
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    Cited by:

    1. Nadia El-Nemr & Béatrice Canel-Depitre & Atour Taghipour, 2017. "Determinants Of Hotel Room Rates," Post-Print hal-02332636, HAL.
    2. Hao Huang & Yide Liu & Dong Lu, 2020. "Proposing a model for evaluating market efficiency of OTAs: Theoretical approach," Tourism Economics, , vol. 26(6), pages 958-975, September.
    3. Melnyk, Iryna & Barna, Marta, 2022. "Pricing strategies in the revenue management system of hotel enterprises," Economic and Regional Studies (Studia Ekonomiczne i Regionalne), John Paul II University of Applied Sciences in Biala Podlaska, vol. 15(3), September.
    4. Aldric Vives & Marta Jacob & Eugeni Aguiló, 2019. "Online hotel demand model and own-price elasticities: An empirical application in a mature resort destination," Tourism Economics, , vol. 25(5), pages 670-694, August.
    5. Ibrahim Mohammed & Basak Denizci Guillet & Rob Law & Wassiuw Abdul Rahaman, 2021. "Predicting the direction of dynamic price adjustment in the Hong Kong hotel industry," Tourism Economics, , vol. 27(2), pages 346-364, March.
    6. Cedric Hsi-Jui Wu & Hung-Jen Li & Chung-Wen Chiu, 2014. "Understanding Consumer Responses to Travel Websites from Online Shopping Value and Flow Experience Perspectives," Tourism Economics, , vol. 20(5), pages 1087-1103, October.
    7. 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.
    8. Melnyk Iryna & Barna Marta, 2022. "Pricing Strategies in the Revenue Management System of Hotel Enterprises," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 15(3), pages 384-397, September.
    9. Zhang, Ke & Hou, Yuansi & Li, Gang, 2020. "Threat of infectious disease during an outbreak: Influence on tourists' emotional responses to disadvantaged price inequality," Annals of Tourism Research, Elsevier, vol. 84(C).
    10. Yunmei Bai & Chun-Hung Tang, 2021. "Determining the optimal group rate in the hotel industry," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(4), pages 446-456, August.

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