Global Business and Finance Review (Jun 2020)
The Hidden Price of Hotel FeaturesForming Room Rate: Focused on Star-type Segmented Market in China
Abstract
Purpose: This study is to analyze the price characteristics of three- to five-star hotel room prices in Beijing Central Business District to find the hidden prices of hotel rooms in the area. Design/methodology/approach: This research used the hedonic price model to analyze the data collected by the network search engine to find hidden elements that affect the price of hotel rooms. The feature variables of the hotel are divided into three categories including internal features, external features and time features in two different markets: the overall market and the star-type segmented market in China. Findings: In the overall market, among hotel room interior features, hotel star rating, room area, free breakfast, food & beverage service quality, hotel facilities & equipment and free internet service have an impact on the hotel room price, with an implied price. For the hotel room exterior features, distance and the hotel-owned business district have a significant relationship with the price of the hotel room, with an implied price. In the star-type segmented market, all hotel room interior features have a significant relationship with the hotel price. Also, the features of competitors have very significant implied prices, which will greatly impact the pricing of hotel rooms in the star-type segmented market. Research limitations/implications: Managers can decide whether to improve the investment in a feature to increase the quality of the feature, or to control the cost of the feature to reduce unnecessary expenditure through the calculation results. Since the study was conducted only in the Beijing area, extended research must be carried out beyond Beijing to achieve more universal applicability. Originality/value: This study investigated the pricing of hotel rooms based on the hedonic price method to explore the price elasticity of the relevant features of hotel room products, and understand the needs and preferences of consumers in different market segments. It established different star segment market models and analyzed the differences in the types and elasticity of the features of significant implied prices in different star market models
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