Best-Available-Rate Pricing at Hotels:

Only available on StudyMode
  • Download(s) : 71
  • Published : August 26, 2013
Open Document
Text Preview
CHR Reports
TheCenterforHospitalityResearch.org

Best-available-rate Pricing at Hotels:
A Study of Customer Perceptions and Reactions

By By Kristin V. Rohlfs and Sheryl E. Kimes, Ph.D.

THECENTERFORHOSPITALITYRESEARCH.ORG • CORNELL UNIVERSITY

BEST-AVAILABLE-RATE PRICING • 1

Best-available-rate Pricing at Hotels:
a Study of Customer Perceptions and Reactions
is produced for the benefit of the hospitality industry by The Center for Hospitality Research at Cornell University Gary M. Thompson, Executive Director Glenn Withiam, Director of Publication Services

Advisory Board

James C. Allen, Executive Vice President, Wines, Southern Wine and Spirits of New York Jan A. deRoos, Ph.D., HVS International Professor of Finance and Real Estate, Cornell University Cathy A. Enz, Ph.D., Louis G. Schaeneman, Jr., Professor of Innovation and Dynamic Management, Cornell University Unmesh Joshi, Chairman and Managing Director, Kohinoor Group Jo-Anne Kruse, EVP Human Resources, Travel Distribution Services Division, Cendant Corporation Craig Lambert, SVP Portfolio Management, CNL Hospitality Group Mark V. Lomanno, President, Smith Travel Research W. Michael Lynn, Ph.D., Associate Professor, Cornell University Suzanne R. Mellen, Managing Director, HVS International Leland C. Pillsbury, Chairman and CEO, The Thayer Group of Companies Angel Santos, VP of Marketing for Healthcare and Hospitality, JohnsonDiversey Janice L. Schnabel, Managing Director, Marsh’s Hospitality Practice David A. Sherf, SVP, Real Estate/Asset Management, Hilton Hotels Corporation Judy A. Siguaw, D.B.A., Dean, Cornell-Nanyang Institute Barbara Talbott, Ph.D., EVP Marketing, Four Seasons Hotels and Resorts Elaine R. Wedral, President, Nestlé R&D Center and Nestlé PTC New Milford R. Mark Woodworth, Executive Managing Director, Best-available-rate Pricing at Hotels The Hospitality Research Group CHR Reports, Vol. 5, No. 7 (May 2005) Single copy price US$50.00 Copyright © 2005 by Cornell University

Thank you to our generous corporate supporters. Senior Partners

Partners

Sponsors

T

H E

C

E N T E R F O R

H

O S P I T A L I T Y

R

E S E A R C H

.

O R G

Executive Summary

Best-available-rate Pricing at Hotels:
A Study of Customer Perceptions and Reactions
By Kristin V. Rohlfs and Sheryl E. Kimes, Ph.D.

V

is a popular revenue management technique by which hotel managers set different nightly rates for the same room based on expected room demand. Operational policies and procedures associated with variable pricing may be confusing to customers, especially if they are not familiar with the practice. Best-available-rate (BAR) pricing is an attempt to reduce that confusion and to guarantee that the This study surveyed 153 travelers to meaguest is quoted the lowest available rate sure their reactions to BAR pricing and their for each night of a multiple-night stay. As a result, instead of paying the same perception of its fairness, acceptability, reasonableness, and honesty. We found that for price for each room-night, the guest a multiple-night stay, customers prefer to be would pay different prices each night. quoted individual rates for each night (nonUnderstanding customers’ perceptions blended rates) rather than the average price of a BAR policy can help hotel managers per night over the stay (blended rates). Overall, better apply revenue management tools customers found individual rates to be signifthat maximize revenue without compro- icantly more fair, acceptable, reasonable, and mising guest satisfaction. honest than blended rates. However, custom-

ARIABLE PRICING, OR DEMAND-BASED PRICING,

4 • BEST-AVAILABLE-RATE PRICING

CORNELL UNIVERSITY • THECENTERFORHOSPITALITYRESEARCH.ORG

About the Authors

Kristin V. Rohlfs is a Ph.D. candidate at the Cornell University School of Hotel Administration (kvr3@cornell.edu). The holder of a M.M.H. degree from Cornell, her research to date has focused...
tracking img