Title: Hotel strategic pricing in Europe: a 10-year exploration of competition

Authors: Cathy A. Enz; Linda Canina; Jean-Pierre I. Van Der Rest

Addresses: School of Hotel Administration, Cornell University, Ithaca, NY 14853-6902, USA ' School of Hotel Administration, Cornell University, Ithaca, NY 14853-6902, USA ' Department of Business Studies, Leiden Law School, Institute for Tax Law and Economics, Leiden University, Leiden, 2311 ES, The Netherlands

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.

Keywords: pricing strategy; revenue management; competitive dynamics; price positioning; discounting; hotel industry; hotel pricing; Europe; competitor pricing; hotels.

DOI: 10.1504/IJRM.2016.077016

International Journal of Revenue Management, 2016 Vol.9 No.2/3, pp.92 - 107

Available online: 17 Jun 2016 *

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