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New research: Airbnb’s impact on peak-season hotel pricing | EurekAlert!

As hotels experience increased pressure from the growth of hosting sites such as Airbnb, new research from the Tepper School of Business proposes strategies for hotels to cope with the competition while suggesting that government regulation is limited in its ability to control industry disruption.

Hui Li, Assistant Professor of Marketing, and Kannan Srinivasan, H.J. Heinz II Professor of Management, Marketing and Business Technologies, published the findings in the INFORMS journal Marketing Science. The research, titled “Competitive Dynamics in the Sharing Economy: An Analysis in the Context of Airbnb and Hotels,” targets hotels, but its premise also could apply to other industries that are similarly disrupted by sharing economy platforms, such as taxis that are facing competition from Uber and Lyft.

Hotels have a fixed capacity, explains Li: they can’t change the supply of rooms, only the price at which these services are offered. That’s why prices rise when demand is highest, such as the summer vacation season, and fall during off-peak times, a commonly used strategy known as seasonal pricing.

While Airbnb can change its prices, its supply also fluctuates according to demand, says Li: Listings increase in peak seasons due to higher demand and prices and drop off other times, when hosts don’t anticipate much business.

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New research: Airbnb’s impact on peak-season hotel pricing | EurekAlert! Science News.

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