On-line pricing: An analysis of hotel-company practices. T he importance of electronic hotel-distribution routes has grown substantially in recent years. According to statistics quoted in the Horwath Worldwide Hotel Industry Studies, direct reservations fell from approximately 39 percent in 19% to 33 percent in 1999, with the shift in sales going almost exclusively to electronic channels.’ While hotels continue to make extensive use of travel-agent-oriented global distribution systems (GDSs), consumer adoption of the internet as a reliable and secure commerce medium has prompted a change in the way in which hotel rooms are being distributed. | On-Line Pricing: An Analysis of Hotel-Company Practices Peter O’Connor Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved Introduction According to statistics quoted in the Horwath Worldwide Hotel Industry Studies, direct reservations fell from approximately 39 percent in 1995 to 33 percent in 1999, with the shift in sales going almost exclusively to electronic channels (O’Connor 2001, 70–93). While hotels continue to make extensive use of travel-agent-oriented global distribution systems (GDSs), consumer adoption of the internet as a reliable and secure commerce medium has prompted a change in the way in which hotel rooms are being distributed. Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved Introduction Cont. From a consumer’s perspective, purchasing travel products on line has become faster, easier, and more convenient than contacting a travel agent or telephoning a supplier directly. According to a recent report by Jupiter Media Metrix, on-line travel sales will more than triple in the next five years—from US$18 billion in 2002 to US$64 billion in 2007 Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved Introduction Cont. The Travel Industry Association of America (TIAA) estimated that by the end of 2002 between 6 percent and 10 percent of all travel reservations will originate on the web (TIAA 1998). Price is key to selling successfully on line. More so than: saving time, getting bonus loyalty-club points, more control, or obtaining better information. Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved Hotel Pricing on the Web Yesawich, Pepperdine & Brown found in a 2000 study that almost six out of ten leisure travelers now actively seek the “lowest possible price” for travel services. Such a perception has developed because: many of the best-known internet retailers (such as, ) initially competed with traditional outlets based on price. consumers are aware that web-based distribution costs are . | On-Line Pricing: An Analysis of Hotel-Company Practices Peter O’Connor Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved Introduction According to statistics quoted in the Horwath Worldwide Hotel Industry Studies, direct reservations fell from approximately 39 percent in 1995 to 33 percent in 1999, with the shift in sales going almost exclusively to electronic channels (O’Connor 2001, 70–93). While hotels continue to make extensive use of travel-agent-oriented global distribution systems (GDSs), consumer adoption of the internet as a reliable and secure commerce medium has prompted a change in the way in which hotel rooms are being distributed. Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved Introduction Cont. From a consumer’s perspective, purchasing travel products on line has become faster, easier, and more convenient than contacting a travel agent or telephoning a supplier directly. According to a recent report by Jupiter Media Metrix, on-line travel
