Pricing Strategies for Resort Fees: Consumer Preferences Favor Simplicity
Purpose– The purpose of this study is twofold: to determine hotel customers’ preference among hotel amenities pricing strategies, specifically a bundled, all-inclusive charge in the form of a resort fee, a limited choice resort fee at a lower price or a la carte pricing, and to determine whether hotel customer prefer bundled or partitioned pricing when faced with a mandatory resort fee.
Design/methodology/approach– An online survey of participants aged 18 years and older who had taken an overnight leisure trip in the past six months is conducted. A fixed-choice set conjoint analysis is performed to analyze the 353 usable surveys.
Findings– Results of this conjoint analysis show that 67 per cent of respondents prefer bundled pricing over partitioned pricing. Respondents also show higher utility for no resort fee and paying for amenities based on usage instead of being forced to pay a mandatory resort fee.
Practical implications– Guest preferences for pricing strategies can provide hotel operators with valuable information on how to establish pricing structures. Results suggest that hotel operators could benefit from presenting a bundled price inclusive of room rates and mandatory fees.
Originality/value– This is the only known study that examines mandatory fees in which customers receive additional amenities or services in exchange for an additional surcharge. This study also adds to the literature on pricing research in the hospitality industry.