An analysis of asymmetry in dynamic pricing of hospitality industry. (August 2020)

• Record Type: Journal Article
• Authors: Mitra, Subrata Kumar
• Is Part Of: International journal of hospitality management. Volume 89(2020)
• Publication Date: 2020-08
• Subjects: Revenue management -- Dynamic pricing -- Price per room -- Asymmetric relationship -- Nonlinear ARDL model; Hotel management -- Periodicals; Restaurant management -- Periodicals; Food service management -- Periodicals; Hôtels -- Gestion -- Périodiques; Restaurants -- Gestion -- Périodiques; Services alimentaires -- Gestion -- Périodiques; Food service management; Hotel management; Restaurant management; Periodicals; 647.94
• DOI: 10.1016/j.ijhm.2019.102406
• Languages: English
• ISSNs: 0278-4319

Abstract

Highlights: Analysed asymmetric relationship tourist arrival and dynamic pricing. Price per room do not exhibit a long-run equilibrium relationship with tourist arrival. Applied the Nonlinear Autoregressive Distributed Lag framework of Shin (2014). Hotels are more concerned for demand decrease and reduce prices at a steeper rate. Abstract: The paper analyzes the influence of changing tourist arrival on various hotel performance measures related to prices, such as price charges per room, revenue per available room, occupancy rate, and total revenue using price dynamics of Oslo as a case. It also measured whether there is an asymmetric relation between the above performance measures in response to the increase and decrease of tourist arrival. While the presence of a significant long-run relationship between tourist arrival and revenue per available room, capacity utilization, and total revenue has been confirmed, it was found that the price per room does not have such a relationship, and it suggests that the price adjustments are made only on short-run considerations. Another interesting observation is that the magnitude of asymmetric influence is high for revenue per available room and occupancy rate when tourist arrival declines, compared to the corresponding magnitude when tourist arrival increases. These findings indicate that there lies a scope to improve the dynamic pricing model currently being followed.