Title

Does Discounting Work in the Lodging Industry?

Authors

Authors

R. Croes;K. J. Semrad

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

J. Travel Res.

Keywords

hotels; discounting; rational expectations theory; error correction; model; AUTOREGRESSIVE TIME-SERIES; UNIT-ROOT; COINTEGRATION ANALYSIS; PERISHABLE PRODUCTS; DEMAND; TOURISM; PRICE; REGRESSION; VECTORS; HOTELS; Hospitality, Leisure, Sport & Tourism

Abstract

The central intent of this econometric case study analysis is to examine the relationship between discounting room rates and hotel financial performance. The study provides a theoretical framework that investigates the fundamentals of discounting and empirically assesses the efficacy of the discounting process in the lodging industry. The study adopts an error correction model to properly account for the dynamics of the industry. The results indicate that the variables may be modeled as an integrated process and which are linked in the long run and also possess a short-term relationship. The research findings suggest that discounting works both in the short term and the long term only if the discount rate exhibits serial correlation or nonstationary tendencies.

Journal Title

Journal of Travel Research

Volume

51

Issue/Number

5

Publication Date

1-1-2012

Document Type

Article

Language

English

First Page

617

Last Page

631

WOS Identifier

WOS:000307449000008

ISSN

0047-2875

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