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Reactive pricing strategies don’t work in hospitality, new Cornell study finds | Hotel Marketing

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A ten-year study of pricing and revenues in over 4,000 European hotels revealed that regardless of the economic situation of the time period, hotels that positioned with ADRs above those of their direct competitors benefited from higher relative RevPAR even though they experienced lower comparative occupancies.

The study, published by the Center for Hospitality Research (CHR), found that hotels that maintained average daily room rates (ADR) somewhat higher than the hotels in their competitive set recorded consistently higher revenue per available room (RevPAR), again compared with their competitor hotels. The study, “Competitive Hotel Pricing in Europe: An Exploration of Strategic Positioning,” by Cathy Enz, Linda Canina, and Jean-Pierre van der Rest, is available at no charge from the CHR, at the Cornell University School of Hotel Administration (SHA). The price positioning effect was stronger for branded hotels but was also found in independent properties. Additionally, contrary to the findings of a study of U.S. hotels, maintaining a consistent relative price over time (as compared to having a fluctuating price) did not significantly affect revenue performance for these European hotels, controlling for hotel type and location.

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Reactive pricing strategies don’t work in hospitality, new Cornell study finds.

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