Reputation or brand: The causes of asymmetric responses to hotel price promotions

Abstract

This study investigates the impact of brand and reputational differences on consumer preferences and the effect of these differences on hotel pricing decisions in response to competitors’ price promotions. Accordingly, using reputational and brand difference models, the paper explores how hotels should respond to competitor-driven price promotions. Key findings are as follows. It is not advantageous for hotels to match a competitor’s price promotion instinctively. Moreover, the hotel’s price response is symmetrical in the reputational difference model, but asymmetrical in the brand difference model. Finally, when in determining their price response, hotels should consider the magnitude of their competitors’ price promotions, the number of consumers exclusively attentive to price fluctuations, and variations in consumer preferences for different hotels.