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Research Note: Market Disequilibrium Effect on Hotel Prices

Author

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  • Chiang-Ming Chen
  • Hsien-Hung Chiu

Abstract

The authors reformulate the hedonic price approach by taking into account market disequilibrium in the hotel market. In the reformulated model, the imbalance between room supply and demand is incorporated into the hedonic price function. The hedonic price function for a hotel facing market disequilibrium is then estimated using data from a national panel of international tourist hotels in Taiwan during the period 1996–2008. They find that market disequilibrium has a positive and significant effect on room rates of tourist hotels in Taiwan; that is, an increase in excess demand may significantly raise the room rates. The effects of other physical attributes of hotels on room rates are also discussed.

Suggested Citation

  • Chiang-Ming Chen & Hsien-Hung Chiu, 2014. "Research Note: Market Disequilibrium Effect on Hotel Prices," Tourism Economics, , vol. 20(4), pages 901-909, August.
    • Handle: RePEc:sae:toueco:v:20:y:2014:i:4:p:901-909
    DOI: 10.5367/te.2013.0300
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    References listed on IDEAS

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    1. Abrate, Graziano & Capriello, Antonella & Fraquelli, Giovanni, 2011. "When quality signals talk: Evidence from the Turin hotel industry," Tourism Management, Elsevier, vol. 32(4), pages 912-921.
    2. Ching-Fu Chen & R. Rothschild, 2010. "An Application of Hedonic Pricing Analysis to the Case of Hotel Rooms in Taipei," Tourism Economics, , vol. 16(3), pages 685-694, September.
    3. Chiang-Ming Chen & Chia-Yu Yeh & Jin-Li Hu, 2011. "Influence of Uncertain Demand on Product Variety: Evidence from the International Tourist Hotel Industry in Taiwan," Tourism Economics, , vol. 17(6), pages 1275-1285, December.
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