Highlights
- •The study proposes and empirically validates a dynamic pricing framework.
- •Three groups of factors are identified in their strategic and tactic dimensions.
- •The Shapley-Owen decomposition of R-squared is applied to price regression models.
- •Results allow measuring the relative weight of pricing determinants.
- •Contextual variables have a relevant role in short-run price variations.
Abstract
Dynamic pricing techniques allow using a number of variables in a tactical way compared to standard catalogue prices. This study merges in a conceptual model the relevance of the tactical and the strategic dimension of these variables, classified according to their tangible, reputational or contextual nature. To empirically validate the hypotheses, a database of 21.596 price observations was retrieved from booking.com. The study presents a hedonic price function, using the Shapley-Owen decomposition of the R-squared to elicit the importance of each group of factors. Further, a hierarchical cluster analysis measures the presence of heterogeneity across operators. The results show that online reputation is gaining importance over the traditional star rating. Despite the tangible variables remain of paramount importance, the findings suggest the relevant role of contextual variables in short-run price variations. The players operating in the tourism and hospitality industries should integrate these findings when designing pricing strategies.
Keywords
- Dynamic prices;
- Competition;
- Online reputation;
- Hedonic pricing model;
- Shapley-Owen decomposition
Economics of tourism and transport, Edited by Dr Neelu Seetaram
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When my course finished last April, it was time to start a new life in Europe.It was a tough time in May, because hunting for a job as an inexperienced international student is not easy at all. I have been a student for more than ten years and barely have any work experience. I am thankful to Edmund from Postgraduate Placement and Language Support at BU, who gave me precious suggestions as well as self-confidence.It was tough at first. I searched for jobs on MyCareerHub and sent my CV every day, but only received a few replies, most of them were refusals. Then, I received the first interview chance in my life! That day, I was very nervous and unfortunately the nerves got the best of me. The HR manager asked, “What do you think about our website?” I answered, “Sorry, I did not see your company’s website”. That was an embarrassing experience, but I learnt from it. Following my terrible start, I attended some interviews, calmer and cleverer. Finally, I received an invitation from Corinthia Hotel. I succeeded!
Corinthia Hotel, Saint George’s Bay is a five star hotel located in Malta. It is a wonderful destination with luxury and elegance. After solving my visa issue, I started my journey to Malta!
The weather in Malta is definitely hot; it is not very comfortable working in a suit and high-heeled shoes. However, the colleagues and guests are really nice people, which makes the time easier and happier. I have learnt a lot of practical things here, for example making coffee, setting cutlery and making cocktails. I have also acquired some knowledge about fine wines, desserts, and local speciality dishes from a variety of regions – and I luckily tasted them as well! Besides the work experience, I was honoured to attend the Corinthia Annual Donation Party at the end of my internship. I do like the scenery here, the sunny weather, blue sea and the old historical town. And at work, I met friendly and interesting people whom I regard as my best friends forever. I am really happy with my time in Malta!
By Liyuan Zhang
