Who is Your Rival? : Competitive Dynamics and Hotel Pricing Decisions

Abstract

This study investigated the effects of competitors on a local hotel manager‟s strategic pricing decision. Daily room rates of local hotels were analyzed to answer this research question. We found that a local hotel manager‟s strategic competitive pricing decisions were significantly influenced by a rival hotel‟s (1) who were similar in size, price, market segment, and location; (2) who had a stronger market position and; (3) who were chain-managed or chain-owned. The results of this study should assist hotel managers in effectively developing competitive pricing strategies.