Hotel strategic pricing in Europe: a 10-year exploration of competition
by Cathy A. Enz; Linda Canina; Jean-Pierre I. Van Der Rest
International Journal of Revenue Management (IJRM), Vol. 9, No. 2/3, 2016

Abstract: This study explores the effects of competitor pricing levels on relative revenue among over 4000 hotels in Europe over a 10-year period (2004-2013). This sample of European hotels, which included both independent and chain-affiliated properties, achieved higher revenue per available room (RevPAR) than direct competitors when they positioned their hotels with comparatively higher prices. These data revealed that regardless of the economic situation of the time period, hotels that positioned with average daily rates (ADRs) above those of their direct competitors benefited from higher relative RevPAR even though they experienced lower comparative occupancies. This finding was stronger for chain-affiliated vs. independent hotels. Maintaining a consistent relative price over time did not significantly affect revenue performance, controlling for hotel type and location. As is the case with previous, similar studies, the findings argue for a firm, strategic approach to pricing, rather than a reactive or strictly tactical approach.

Online publication date: Fri, 17-Jun-2016

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