Pricing for Revenue Enhancement in Asian and Pacific Region Hotels: A Study of Relative Pricing Strategies
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This report explores pricing strategies for competitive hotels in 14 different Asian-Pacific countries. The research is based on comparing average percentage differences in occupancies, average daily rates (ADR), and revenue per available room (RevPAR) among competing high end hotels in local markets using data gathered monthly between 2001 and 2006. The results reveal that hotels that price below their competitive sets have lower RevPARs, but do not gain concomitant occupancy boosts. Hotels that charge a price premium have substantially higher RevPARs than their competitors, but without substantial reductions in occupancy. Overall, occupancies remain stable while revenues go up or down depending on whether a hotel sets rates above or below those of its competitive set. This report presents an extension of two previous Cornell Hospitality Reports which found that U.S. hotels that discount relative to their competitive set have higher occupancy and lower RevPAR. Examining both U.S. and Asian data over the period of 2001 to 2006 showed that higher occupancies do not necessarily accompany the decision to discount prices, as they did for U.S. hotels in 2001 through 2003. The study explores the ASEAN, China, and Australian markets separately and finds similar patterns.