Market research on online pricing modes
Market research on online pricing modes conducted by the Center for Advanced Tourism Studies (CAST) of the University of Bologna in collaboration with Thot S.r.l.
Testing the presence of a causal link in the relationship between price and quality of hotels.
The goal of the study is to test whether a change in overall quality score results in a significant change in price, so as to define whether there is a causal link between price and quality.
To this end, an experiment designed to measure a form of real price behavior (Viglia et al., 2021) was conducted involving 304 operators active in the hotel segment.
The questionnaire submitted to the survey participants simulated two alternative scenarios, as well as including some socio-demographic variables related to the respondent and others related to hotel characteristics.
30 respondents participated in the survey, most of them with educational qualifications of High School Diploma or above and a median age falling in the 50 and above class, confirming the respondents' high experience in the industry. The hotels were found to be predominantly business segment.
Two test statistics were calculated to understand whether the average price observed in the baseline situation differs significantly from the average price that would be entered in Booking.com in the case where the quality score is one level higher or lower.
The result of these tests is that the observed difference is indeed significant with p-value <1%.
To make the results even more robust, one million simulations were performed on the test statistics and the results are significant in both tests, with p-value again <1%.
In light of what has been observed, it can be concluded that the pricing strategy takes into account (also) the quality score online and, therefore, there is a causal link between price and quality.