Pricing policies in hotels: a psychological threshold research in online and offline channels

Abstract

This research analyses the perception that customers have regarding hotel prices at the time of making their final purchase decision. Price perception depends on the analysis of psychological thresholds. When a hotel decreases their prices, will customers really perceive a gain and change their purchasing decision? If a hotel increases their prices, will customers really perceive a loss and change their purchasing decision? There is not a comprehensive model that allows a global vision taking into consideration all these factors. We analyse the state of the art in price policies regarding psychological thresholds and define a global model based on six different price thresholds. We contrast the proposed model focusing on differences between online and offline channels. We analyse a Spanish Hotels sample located in the region of La Rioja. Our results show that perceived gain and loss in price by customers are different for online and offline channels. E-customers are more influenced by hotel selection and the hotel brand. Loyalty and difficulty to compare hotels uniquely affects offline customers. We find as well factors with influence in both channels: promotions and price volatility. Our findings will let hotel managers increase their occupation rate and profitability playing with psychological prices threshold.