The More the Merrier? Understanding How Travel Frequency Shapes Willingness to Pay

Abstract

Customers’ evaluation of hotel prices has received increasing attention in hospitality research. Beyond the specific attributes of the offer, internal norms related to prior experiences affect customers’ response to price. Drawing on the behavioral price literature, this study investigates the effect of travel frequency and reference price on the formation of travelers’ willingness to pay (WTP) for accommodation. The study presents a novel methodological approach introducing the concept of instantaneous indirect effect. Results offer support for an inverted U-shaped relationship between travel frequency and WTP, mediated by the internal reference price. WTP reaches its peak when the customer has booked an accommodation 6 times in the past 2-year period. The findings provide clear implications for practitioners. Monitoring customers’ travel frequency and integrating it into dynamic pricing models will create a better alignment of room rates with travelers’ WTP, which will make revenue management techniques more customer centric and, ultimately, enhance profitability.

Willingness-to-pay for robot-delivered tourism and hospitality services – an exploratory study

“…Fourthly, contrary to previous studies (Nieto-García et al, 2020), the travel frequency of customers was negatively rather than positively associated with the WTP. Therefore, it seems that the higher travel frequency of customers makes them value the "high-touch" services more than the "high-tech" ones.…”

Revenue Management and The Runnin’ Rebels: A Case Study of Willingess-to-Pay for College Sports

“…For example, sometimes the presence of an attribute does not increase WTP, but its absence will decrease it (Wong & Kim, 2012). Loyal customers are also less likely to be price sensitive (Nieto-García, et al, 2020), which can be important for sports pricing.…”

Influence of satiation on consumer behavior in hospitality

“…Based on the answers, an open‐ended question was asked to quantify their WTP for subsequent purchases. Previous studies on tourist accommodations (Nieto‐García et al, 2017, 2020) and other topics (Li & Meshkova, 2013) have incorporated this method. We asked participants to express their WTP in terms of the price per double/single room per night and person (without extra expenses).…”