Modelling a decision maker's preferences, part 2: a tool for pricing decisions in the hospitality industry

Authors: Israeli A.A.; Brown J.R.

Source: Tourism Economics, Volume 10, Number 1, 1 March 2004 , pp. 5-22(18)

Publisher: IP Publishing Ltd

Key:
Free Content - Free Content
New Content - New Content
Subscribed Content - Subscribed Content
Free Trial Content - Free Trial Content

Abstract:

Pricing decisions in the hospitality industry are subject to a number of different and competing considerations, including economic (profit), marketing (what price will guarantee a sale), yield, wear and tear on the facility, the owner's preferences, and the manager's preferences. Since a manager balances all these conflicting considerations in determining his or her own preferences, the manager's preferences should be used as the starting point for generating a pricing policy. Specifically, the manager's preferences for the two substitutable attributes – the number of rooms sold and the average room rate – are modelled using the Constrained Choice Table (CCT) to collect the specific preferences and the Linear-Fractional model to fit linear indifference curves with non-constant rates of substitution (unequal slopes) to the CCT data. This model combined with the marginal cost per room is used as a starting point to develop and evaluate different pricing policies. The consequences of using an average room rate, same value room rate pricing policy for two different types of managers, one occupancy level sensitive and the other average room rate sensitive, are evaluated.

Keywords: DECISION MAKING; PREFERENCES; HOSPITALITY; YIELD; SERVICE

Document Type: Regular paper

The full text electronic article is available for purchase. You will be able to download the full text electronic article after payment.

$28.00 plus tax      Refund Policy

 

OR

Back to top

Key:
Free Content - Free Content
New Content - New Content
Subscribed Content - Subscribed Content
Free Trial Content - Free Trial Content
Share this item with others: These icons link to social bookmarking sites where readers can share and discover new web pages.
Page Help Click here for Page Help
Shopping cart
Tools
Sign in






Need to register?
Sign up here
Text size: A | A | A | A