Friday, July 15, 2016

Pricing strategies in the hotel industry

TOPICS: Pricing
SUMMARY: Hotel chains, including Wyndham, Hilton and Marriott, are offering discounts as high as 25% to loyalty-program members who book reservations through a hotel's website.
CLASSROOM APPLICATION: Students can evaluate the response by hotel chains to the commissions charged by online booking sites. In particular, the chains offer financial incentives to customers to join their loyalty programs and book stays on their own sites.
QUESTIONS: 
1. (Introductory) Why are hotel chains offering discounts to loyalty members?

2. (Advanced) What is the effect of online booking sites in the attempted product differentiation by hotel chains? Why is perceived product differentiation important to hotel chains?

3. (Advanced) What is the response by online booking agencies to hotel discounts for loyalty members?
Reviewed By: James Dearden, Lehigh University
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