Pricing strategies for resort fees: consumer preferences favor simplicity

Abstract

Purpose – The purpose of this study is twofold: to determine hotel customers’ preference among hotel amenities pricing strategies, specifically a bundled, all-inclusive charge in the form of a resort fee, a limited choice resort fee at a lower price or a la carte pricing, and to determine whether hotel customer prefer bundled or partitioned pricing when faced with a mandatory resort fee. Design/methodology/approach – An online survey of participants aged 18 years and older who had taken an overnight leisure trip in the past six months is conducted. A fixed-choice set conjoint analysis is performed to analyze the 353 usable surveys. Findings – Results of this conjoint analysis show that 67 per cent of respondents prefer bundled pricing over partitioned pricing. Respondents also show higher utility for no resort fee and paying for amenities based on usage instead of being forced to pay a mandatory resort fee. Practical implications – Guest preferences for pricing strategies can provide hotel operators with valuable information on how to establish pricing structures. Results suggest that hotel operators could benefit from presenting a bundled price inclusive of room rates and mandatory fees. Originality/value – This is the only known study that examines mandatory fees in which customers receive additional amenities or services in exchange for an additional surcharge. This study also adds to the literature on pricing research in the hospitality industry.

Pricing Models in a Captive Market: A Case Study of LCC Dormitories

“…Correspondingly, the shorter the stay of a resident in the dormitory, the higher the probability that he will prefer a bundled fee. Contrary to the findings in the hospitality industry of the study conducted by Repetti et al (2015), the customers in the accommodation sector preferred a partitioned fee over a bundled fee or a limited choice fee. This preference is inconsistent with the pricing strategy employed by most dormitories across multiple countries.…”

“…Hence, it is critical for both managers and customers to understand the reasoning of pricing strategies in this industry. Repetti et al (2015) found that hotel consumers prefer bundled pricing over partitioned pricing in a report of 2 to 1, favoring the former. Similar findings are reached by Bambauer and Gierl (2008) in a study about purchasing decisions in commerce.…”

“…According to the study by Repetti, Roe and Gregory (2015), the customers in the hospitality industry preferred the bundled pricing strategy over the partitioned pricing strategy. Therefore, the results presented in table four reject the first hypothesis of this study, which stated that the residents will prefer the current limited choice pricing strategy.…”

“…According to a study by Repetti et al (2015), customers prefer bundled pricing strategies in the hospitality industry. A possible explanation for this behavior is the "inferred bundled saving effect" which states that consumers generally believe that bundles involve a discount (Heeler, 2008).…”

Different or Similar Choices: The Effect of Decision Framing on Variety Seeking in Travel Bundle Packages

“…Bundling, a commonplace marketing method, involves selling two or more products/services in a package, oftentimes for a special price (Adams and Yellen 1976;Guiltinan 1987). Examples of bundled products in the hospitality and tourism industries include combined restaurant meals, hotel amenities, and travel packages (Kim, Bojanic, and Warnick 2009;Kwon and Jang 2011;Repetti, Roe, and Gregory 2015). Bundled travel products such as accommodation and transportation are particularly prevalent in online travel intermediaries (OTAs; Kim, Bojanic, and Warnick 2009;Tanford, Baloglu, and Erdem 2012).…”