On revenue management and last minute booking dynamics

Abstract

PurposeThis study aims to explore booking behavior in an online experiment where the time before the date of stay was controlled for and where action and perceptions were recorded.Design/methodology/approachAn initial pool of 302 students enrolled in various undergraduate and graduate courses in a Midwestern university were asked to participate in the study. Participants were assigned randomly to one of five groups. The treatments differed in the number of days participants had to complete the task of booking a room.FindingsThe findings suggest that a sharp increase in the participants' propensity to book occurs during the last week before the date of stay. In addition, the results of the binomial logistic regression provide strong support for the notion that time and the two assessed perceptions are strongly associated with the booking decisions of last minute deal seekers. Participants were more likely to book the closer it was to the date of stay if they thought the hotel was likely to sell out, and if they expected to be offered a better deal later in the process.Originality/valueThis study explored the role of time in hotel room booking decisions. Research suggests that two relevant trends are to be reckoned with when it comes to last minute bookings. First, a growing segment of the travel market is taking advantage of technological advances that facilitate effective deal‐seeking behavior. Second, these patterns of deal‐seeking behavior, and the manner in which consumers respond and adapt to revenue management policies in their attempt to book optimally, are not well understood yet. Accordingly, this study aimed to explore several aspects of last minute perceptions and behavior.