Pricing Strategy for Green Hotel Industry

Holistic health and prevention are increasingly at the center of tourists’ decisions. Tourists expect to may continue their health and wellness lifestyles when they are away from home. Hospitality can find in the “health and wellness” sector a good response to the requalification needs for the post-COVID period. In fact, since 1900s, the hospitality niche of health and wellness has been increasing around the world, and it has been an important issue for the profit growth for the hospitality destinations. But what is wellness tourism? The Global Wellness Institute defines wellness tourism as travel associated with the pursuit of maintaining or enhancing one’s personal wellbeing. Several hotels have introduced green innovation as the innovation that emphasizes health, safety, and environmental friendliness and implementation of environmental management to ensure ecological wellbeing. One way for hotels to be environmentally friendly is to implement corporate social responsibility (CSR) initiatives. In this paper, we will study the effects of corporate social responsibility policies in the hotel industry. To do that, we will model a non-cooperative hotel competition using game theory concepts. We recall that game theory is a formal, mathematical discipline that studies situations of competition and cooperation between several involved parties and aims to help us understand situations in which decision-makers interact. The model consists in a competition between a CSR hotel and a state-owned (SO) hotel that set room rates. The choice of room rates can be made either simultaneously or sequentially. Our main result is that the CSR hotel profits more than the SO hotel, regardless of the order of movements.