The prominence of the web as a distribution channel for hotel rooms as well as its transparency and ease for price comparison create a need for the hoteliers to think strategically in terms of rate setting and pricing practices on numerous web-based distribution channels. The overarching purpose of this exploratory study is to inves-tigate the current online pricing practices of luxury hotels in Germany and to explore potential challenges that they face in distributing their rooms on the web. The data covering 29 hotels in the top 4 primary cities in Germany was collected from 11 B2C, web-based distribution channels over a 26-day period at 6 separate points in time leading up to predetermined arrival date. These channels, including the hotels' own websites along with 10 indirect channels, represent various types of operation. The data were analyzed by means of descriptive statistics. Personal interviews with the regional director of revenue management and the regional web & e-commerce executive of an international hotel company were conducted to support the findings and to gain supplemental insights into the relevant issues. Key findings of this study were that a complete rate consistency did not exist across the utilized channels, and that a customer who surfs the web for a particular hotel may find better rates and conditions than those offered by the hotels' own websites, which negates the best-rate guarantee that is claimed by many hotels. The reselling of net rates to the end-customer on the web was identified as a crucial challenge faced by the hoteliers, which leads to the loss of a hotel's control over pricing. Furthermore, the findings suggest that in many instances, the hoteliers neither applied logical pricing practices nor ensured an adequate presence on the web. Logical pricing practices aim to optimize revenue, while ensuring customer satisfaction. This paper is meant to be a starting point for hoteliers who are interesting in better understanding the power of online pricing and its impact on hotel profitability, and to reevaluate their prices and presence across the various web-based distribution channels. Shifting away from complex revenue management systems, this study outlines some recommendations that could be useful for hoteliers in their effort to maximize their revenues and profit, while keeping the focus on the customer as a focal point.
Table of Contents
1. INTRODUCTION AND INITIAL SITUATION
1.1 Research Motivation and Problem Depiction
1.2 Significance of the Research and Background of the Research Problem
1.3 Study Objectives and Research Questions
1.4 Outline of the Thesis
2. THEORETICAL AND EMPIRICAL BACKGROUND
2.1 Special Characteristics of Hotel Marketing
2.2 Distribution Channels of Hotel Rooms
2.2.1 Historical Perspective on Electronic Hotel Distribution
2.2.2 The Arrival of the Web Commerce
2.2.3 Hotel Rooms Distribution on the Web (IDS)
2.2.4 Typology of the Internet Distribution System
2.2.5 Channels Connectivity and Data Exchange
2.2.6 Cost of Distribution on the Web
2.3 Pricing of Hotel Rooms
2.3.1 Fundamentals of Pricing and Its Levels of Implementation
2.3.2 The Financial Power of Pricing
2.3.3 Pricing tactics and Practices
2.3.4 Controversial Concepts in the World of Hotel-Room Pricing
2.4 Revenue Management
3. RESEARCH METHODOLOGY
3.1 Research Design
3.1.1 Overview of the Research Design and Philosophy
3.1.2 Sample Selection
3.2 Data Collection
3.2.1 Online Observation and Tracking of Room Rates
3.2.2 Interviewing
3.2.3 Data Analysis
4. RESEARCH FINDINGS AND DISCUSSION
4.1 Channel Used and Availability Patterns
4.1.1 Room Types Availability across Channels
4.2 Room Rates and Pricing Patterns across Channels
4.2.1 Rates Portfolio Offered
4.2.2 Variable Pricing Behavior
4.2.3 Price Comparison across channels
4.2.4 The Myth of Best-Rate Guarantee
4.2.5 Terms and Conditions
4.2.6 The Dilemma of Multiple-Night Stay Pricing
4.3 Findings Outside the Scope of the Study
4.4 Summary of the Expert Interviews
4.4.1 Interview with the Revenue Management Expert
4.4.2 Interview with the e-Commerce Expert
5. CONCLUSIONS
5.1 Conclusion
5.2 Implication and Recommendations
5.3 Limitations of the Study and Avenues for Further Research
Research Objectives and Key Topics
The primary objective of this study is to investigate the current online pricing practices of luxury hotels in Germany and identify the challenges they encounter when distributing rooms via various web-based channels. The research aims to evaluate whether rate consistency is maintained across these platforms and to determine the impact of third-party distribution on a hotel’s ability to control its pricing strategies.
- Analysis of online distribution channels for luxury hotels in Germany.
- Investigation of rate parity and the efficacy of "best-rate guarantees".
- Examination of hotel revenue management practices in the context of web commerce.
- Comparison of pricing patterns between direct and indirect distribution channels.
- Assessment of the impact of booking windows on room rate availability.
Excerpt from the Book
2.1 Special Characteristics of Hotel Marketing
Due to the fact that price and distribution are considered to be two of the most important parts of a hotel's overall marketing effort, it is first necessary in this chapter to elucidate the unique characteristics of the hotel business and its services that considerably influence the way hotel rooms are priced and distributed. Thus, the following characteristics become foundational principles for the rest of the thesis:
Intangibility. Unlike physical products, services are described as intangible products, meaning that they are experienced rather than possessed. Thus, services cannot be evaluated prior to being purchased. Because this aspect has profound implications for both customers and services marketers, service providers often try to “tangibilize” the service, or in other words offer some evidence of the service that will help prospective customers to evaluate it. What is especially significant is that hotel services contain more attributes that are not easily displayed. For example, most hotels maintain an appealing external appearance and lobby as a strategy to provide tangible evidence of their services, though it is difficult for hotels to give every potential guest a tour of the whole property. An important implication of intangible hotel services is that the customers are not sure what they are buying or what they will get; therefore, they sense a higher level of risk and also find it difficult to assess quality or value. This makes the pricing decision a difficult challenge for a hotel service provider since price is closely connected to perceived benefits.
Summary of Chapters
1. INTRODUCTION AND INITIAL SITUATION: Provides an overview of the growing importance of the Internet in the hotel industry and outlines the specific research motivation regarding pricing challenges in the German luxury sector.
2. THEORETICAL AND EMPIRICAL BACKGROUND: Details the foundational characteristics of hotel marketing and describes the typology and operational models of various internet distribution systems.
3. RESEARCH METHODOLOGY: Explains the exploratory, mixed-method research design, including the selection of the 29 luxury hotels and 11 distribution channels used for data tracking.
4. RESEARCH FINDINGS AND DISCUSSION: Presents the analysis of room rate data, availability patterns across multiple booking windows, and the insights gained from expert interviews with industry professionals.
5. CONCLUSIONS: Summarizes the study findings regarding rate consistency, distribution control, and offers practical recommendations for hoteliers to improve their online pricing and distribution presence.
Keywords
Online Room-Pricing, Web commerce, Internet Distribution System, Luxury City Hotels in Germany, Revenue Management, Rate Parity, Rate Integrity, Distribution Channel, Price Elasticity, Hotel Marketing, Consumer Behavior, Booking Window, Third-Party Internet Sites, Pricing Strategy.
Frequently Asked Questions
What is the core focus of this research?
The research focuses on the online pricing behavior and distribution practices of luxury hotels in Germany, specifically examining how they manage their room rates across diverse web-based channels.
What are the primary themes discussed in the thesis?
The thesis explores the impact of Internet distribution systems, the challenges of maintaining rate parity, the role of revenue management, and the influence of third-party intermediaries on hotel profitability.
What is the overarching research goal?
The goal is to analyze the behavioral patterns of luxury hoteliers in Germany and provide recommendations for optimizing revenue while maintaining rate integrity and customer satisfaction.
Which methodology does the author employ?
The author uses a mixed-method approach, combining quantitative analysis of room rates tracked across multiple websites over six booking windows with qualitative data from expert interviews.
What aspects of hotel operations are addressed in the main body?
The main body covers the special characteristics of hotel marketing (intangibility, seasonality, perishability), distribution channel typology, pricing tactics (differential and variable pricing), and the management of rate fences.
How is this research characterized in terms of its utility?
It is classified as applied research, aiming to provide actionable insights for practitioners in the hospitality industry to enhance their online distribution strategies.
How do "soft brand" websites differ from direct hotel websites?
Soft brand websites provide marketing and reservation support for independent hotels, allowing them to gain the capabilities of larger chains without losing their management independence, unlike a hotel's proprietary website.
What did the study conclude regarding the "best-rate guarantee"?
The study found that the "best-rate guarantee" is often more of a myth, as hotels frequently fail to fulfill this promise, particularly far in advance of the arrival date, due to varying rate conditions.
- Arbeit zitieren
- Ashraf Abueed (Autor:in), 2014, Pricing Behavior on the Web. Luxury Hotels in Germany, München, GRIN Verlag, https://www.grin.com/document/309691
