h i g h l i g h t sBridges economics and marketing by exploring (non)price competition in a game theoretic conjoint analysis approach. Develops a framework where hotels with different attributes sustain different prices but still are in equilibrium. Uses conjoint analysis to measure the relative weights of attributes, and to handle the inclusion of a none-option. a b s t r a c tThis paper explores a game-theoretically founded approach to conjoint analysis that determines equilibrium room rates under differentiated price competition in an oligopolistic hotel market. Competition between hotels is specified in terms of market share functions that can be estimated using multinomial logit models of consumer choice. The approach is based on choice-based conjoint analysis that permits the estimation of attributes weights ("part-worths") for an additive utility formulation of the utility function. From this, room rates that equilibrate the market, conditioned on the differences in services and facilities offered by competing hotels, can be determined. The approach is illustrated by an example.

This research note draws attention to a novel choice-based conjoint (CBC) model by which guests’ preferences toward hotel room rate conditions can be predicted as a function of time. Through the model, the notion is explored whether willingness to pay for rate conditions (without penalty) depends on the size of the booking window. The modified choice model includes time as an additional “attribute.” This attribute does not present a feature of the choice propositions, but instead is associated with the choice context. An empirical study was carried out to demonstrate the proposed model using three common booking conditions (i.e., free cancelation, free date change, pay on departure). The results show significant and positive time-dependent mean components for cancelation and date change conditions. Despite a limited sample size, all significant effects have expected directions (no parameter reversals) providing evidence of the robustness of the model. The results indicate that the ability to cancel or change a booking is preferred more when the booking window is bigger. Accordingly, as the time period between the advanced purchase and intended date of arrival increases, the willingness to pay for rate conditions also increases. This finding has major practical implications for price and revenue optimization. Limitations of the proposed time-dependent model are discussed.