The determinants of hotel room rates: an analysis of the hotel industry in Warsaw, Poland

Adam Pawlicz · Tomasz Napierała

75 citations0/0 files storedInternational Journal of Contemporary Hospitality Management

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Consumer Market Behavior and Pricing Diverse Aspects of Tourism Research Housing Market and Economics

Abstract

Purpose This study aims to measure the effect on prices through the differing characteristics and attributes of hotels. Design/methodology/approach A hedonic price model (HPM) was adopted to estimate the impact of various site and situational factors on hotel prices in Warsaw, Poland. To better understand room rates not explained by HPM, spatial analysis of residuals was used. Datasets regarding prices from three different online travel agents (OTAs) and star ratings, either official or provided by OTAs, were investigated. Findings A significant impact on hotel prices by star rating has been confirmed. Every additional star allows the hotel to set approximately 25 to 36 per cent higher prices, which is in line with previous studies. Moreover, two factors indicated a high but still underestimated theoretical hotel prices: location within the city centre and proximity to the international airport. Practical implications The results of this study suggest that hoteliers should use a spatial analysis of room rates offered by the competing enterprises. Moreover, managers are expected to verify their price tactics and policies according to the geographical determinants of hotel prices investigated. Originality/value The uniqueness of the study is highlighted by comparison of HPMs based on data from different OTAs, analysing differences in HPMs based on star ratings provided by OTAs and official systems and spatial analysis of residuals of estimated HPMs. Moreover, this study is among the first to examine the usage of HPM in the hospitality industry in East-Central Europe.

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References

1974Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition 2002Price Dispersion and Differentiation in Online Travel: An Empirical Investigation 1997Chain Affiliation and the Failure of Manhattan Hotels, 1898-1980 2016Strategic and tactical price decisions in hotel revenue management 2010Do brands matter? A comparison of branded and independent hotels’ performance during a full economic cycle 2007Examining the determinants of room rates for hotels in capital cities: The Oslo experience 2012Weekend vs. midweek stays: Modelling hotel room rates in a small market 2014Determinants of a restaurant average meal price: An application of the hedonic pricing model

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