Dynamic Pricing Policies of Hotel Establishments in an Online Travel Agency

Miguel Ángel Ropero

Tourism Economics, 2011, vol. 17, issue 5, 1087-1102

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.

Keywords: competition; online travel agency; probit; product differentiation; reputation; tobit (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:17:y:2011:i:5:p:1087-1102

DOI: 10.5367/te.2011.0082

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