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The exploration of hotel reference prices under dynamic pricing scenarios and different forms of competition.

Viglia, G., Mauri, A. and Carricano, M., 2016. The exploration of hotel reference prices under dynamic pricing scenarios and different forms of competition. International Journal of Hospitality Management, 52, 46-55.

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DOI: 10.1016/j.ijhm.2015.09.010

Abstract

The reference price, used by consumers to evaluate market prices, has tremendous relevance in dynamic pricing. Reconciling current heterogeneous theories and studies on reference prices, this paper analyzes the impact of hotel price sequences on consumers’ reference prices through a lab and a field experiment. Experiment 1 tests the importance of retrospective price evaluations, while Experiment 2 evaluates the impact of three forms of competition: (i) simultaneous behavior, where firms adjust prices simultaneously; (ii) leader-follower behavior, where one firm acts as the leader; and (iii) independent behavior, where each player takes its rival’s strategy as given and seeks to maximize its own profits. The results show that consumers decrease their reference price when competing hotels adjust their prices simultaneously. Relevant managerial implications are drawn for the hospitality industry, which is affected by the presence of online travel agencies that announce the daily rates offered by each competitor.

Item Type:Article
ISSN:0278-4319
Uncontrolled Keywords:reference price; dynamic pricing; hotel pricing; price competition; price comparison
Group:Bournemouth University Business School
ID Code:22606
Deposited By: Symplectic RT2
Deposited On:07 Oct 2015 08:48
Last Modified:14 Mar 2022 13:53

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