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Pricing determinants in hotels: The case of luxury, upscale, and mid-scale price segments

Author

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  • Linden Pohland

    (Rochester Institute of Technology)

  • Muhammet Kesgin

    (Rochester Institute of Technology)

Abstract

Investigating the role of pricing and revenue management is a continual concern as successful businesses rely on sound financial management. This paper examines the pricing objectives, strategy determinants, and strategies employed by hotels while taking managerial concerns into account. The study determines managers’ key pricing concerns and investigates value-informed pricing strategies, making comparisons against the findings of past research to address calls for further investigations. Employing an embedded mixed methods research approach, the study used structured questionnaires and semistructured interviews to gather data from hotel managers influential in price setting. Overall, the study indicates similarities and differences in price determination factors in the hotel industry. Formality in determining prices suggests that pricing is integral to hotel management and hotels employ different pricing strategies depending upon the pricing objectives and strategy determinants. A significant finding is that upscale hotels place high importance on pricing due to intense competition related to their wider product portfolio in comparison to luxury and mid-scale hotels and tend to rely on competition-based pricing. Although exploratory in nature, the results are valuable and provide compelling practical implications and suggestions for future research. Hotel managers can benefit from the wider issues stressed in the paper related to short-term versus long-term, firm-based versus market-based, and relationship versus revenue considerations.

Suggested Citation

  • Linden Pohland & Muhammet Kesgin, 2018. "Pricing determinants in hotels: The case of luxury, upscale, and mid-scale price segments," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 17(4), pages 218-230, August.
    • Handle: RePEc:pal:jorapm:v:17:y:2018:i:4:d:10.1057_s41272-017-0133-x
    DOI: 10.1057/s41272-017-0133-x
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    References listed on IDEAS

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    1. Indounas, Kostis & Roth, Stefan, 2012. "Antecedents and consequences of strategic price management: An analysis in the New Zealand industrial service context," Australasian marketing journal, Elsevier, vol. 20(2), pages 113-121.
    2. Ruth Mattimoe & Will Seal, 2011. "Pricing in a Service Sector Context: Accounting and Marketing Logics in the Hotel Industry," European Accounting Review, Taylor & Francis Journals, vol. 20(2), pages 355-388.
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    Cited by:

    1. Claudio A. Piga & Graziano Abrate & Giampaolo Viglia & Francesca Canio, 2022. "How the hospitality industry reacts to COVID-19: structural, managerial and tactical factors," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(5), pages 503-516, October.
    2. Christen, Tatjana & Hess, Manuel & Grichnik, Dietmar & Wincent, Joakim, 2022. "Value-based pricing in digital platforms: A machine learning approach to signaling beyond core product attributes in cross-platform settings," Journal of Business Research, Elsevier, vol. 152(C), pages 82-92.

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