eCornell Study Argues for a Firm, Strategic Approach to Hotel Pricing

This study explores the effects of competitor pricing levels on relative revenue on a sample of over 4,000 hotels in Europe over a ten-year period (2004–2013).

Hotels  in this European sample, which included both independent and chain-affiliated properties, achieved higher revenue per available room (RevPAR) than direct competitors when they positioned their hotels with comparatively higher prices.

These data revealed that:

  • Regardless of the economic situation of the time period, hotels that positioned with average daily rates (ADRs) above those of their direct competitors benefited from higher relative RevPAR even though they experienced lower comparative occupancies.
  • This finding was stronger for chain-affiliated hotels than for independent hotels.
  • Maintaining a consistent relative price over time (as compared to having a fluctuating price) did not significantly affect revenue performance, controlling for hotel type and location.

A further analysis of hotels in the Netherlands likewise found the same connection between relatively higher rates and revenue. As is the case with previous, similar studies, the findings argue for a firm, strategic approach to pricing, rather than a reactive or strictly tactical approach.


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