Length of stay control: Is it a fair inventory management strategy in hotel market?

Abstract

According to past revenue management (RM) research, length of stay control (LOSC) plays a significant role in building effective RM systems and increasing revenues in the hotel industry. While LOSC has been widely implemented in the hotel’s online booking systems, little attention has been paid to this important non-pricing RM practices. Thus, the current study aims to provide a holistic view of customers’ perceptions toward hotel’s LOSC practice. In particular, this study (1) investigates the impact of LOSC practice on customers’ perceived fairness and subsequent behaviors and (2) tests the moderating role of customers’ membership status on perceived fairness. A between-subjects factorial design and partial least squares structural equation modeling (SEM) analysis were employed to test the structured relationships. Research findings demonstrate that customers perceive LOSC as unfair, such poor fairness perceptions leading to negative word-of-mouth and a decrease in willingness to book. Hotels’ loyalty program members are likely to perceive LOSC as much more unfair than those who are not. The current study is the first study to reveal the critical roles of hotels’ LOSC practice and loyalty membership on customers’ perceived fairness and subsequent behavior intentions.

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