Can setting hotel rate restrictions help balance the interest of hotels and customers?

Abstract

Purpose – The purpose of this study is to assist hoteliers to design hotel rate restrictions that are in the interest of hotels and of customers, under the joint influence of room rates and rate fences. Design/methodology/approach – This study used a questionnaire as the data collection instrument. Conjoint analysis was applied to examine customers’ preferences regarding hotel rate fences. Findings – The results indicate that refundability, price and advance requirement, in that order, are identified as the most important attributes in the overall decision-making process of customers. Changes allowed and rule type are comparatively less important attributes. Research limitations/implications – This study extends the hotel revenue management literature by examining customer preferences for hotel rate restrictions based on their socio-demographic characteristics and travel behavior. This study also illustrates the usefulness of conjoint analysis in determining the utility values of hotel-room rates and rate fences. Practical implications – The findings of this study may help professional hoteliers to better understand customers’ decision-making process and underlying needs, thus helping them to design attractive rate fences that are in the interests of both hotels and customers. Originality/value – This study is the first to investigate customer preferences regarding hotel rate restrictions based on demographic and travel behavior information. The identification of these preference values should help hoteliers to identify the decision-making processes and needs of customers.