Abstract

Hotel managers have long toiled over a course of action that would help them preserve hotel revenue during diminished demand seasons. They have responded to this challenge by discounting hotel room rates to sustain revenue and the means by which they could determine how discounting could increase hotel financial performance. That revenue would otherwise be lost when supply of rooms exceeds the demand. Their need to find a procedure to aid them in solving hotel occupancy problems that threaten that revenue has been a source of discussion throughout the industry. However, most of the studies are more prescriptive and normative in scope rather than focusing on providing explanation of the behavioral pricing of hotel managers. This paper departs from previous studies in that it aims at providing an explanation of the discounting behavior and claims that discounting works in the short-term in the case of a perishable product (hotel rooms).

Keywords

discounting; perishable products; dynamic industry; seasonality; equilibrium; hotel manager; average price approach

Publisher

The Dick Pope Sr. Institute for Tourism Studies

College

Rosen College of Hospitality Management

Publication Date

1-1-2009

Document Type

White Paper

Format

application/pdf

Language

English

Rights

No part of this publication may be reproduced, transmitted, transcribed, stored in a retrieval system, or translated into any language, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission from The Dick Pope Sr. Institute for Tourism Studies. All copyright, confidential information, design rights and all other intellectual property rights of whatsoever nature contained herein are and shall remain the sole and exclusive property of The Dick Pope Sr. Institute for Tourism Studies. The information furnished herein is believed to be accurate and reliable. However, no responsibility is assumed by The Dick Pope Sr. Institute for Tourism Studies for its use, or for any infringements of other rights of third parties resulting from its use. The UCF and The Dick Pope Sr. Institute for Tourism Studies name and logo are trademarks or registered trademarks of the University of Central Florida.

Number of Pages

9 p.

Type

article

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