Future of perceived price fairness research in hospitality

Book chapter

Van der Rest, J., Wang, X. and Heo, C. 2014. Future of perceived price fairness research in hospitality. in: Pantelidis, I. (ed.) The Routledge handbook of hospitality management Routledge, Taylor & Francis. pp. 134-154
Chapter titleFuture of perceived price fairness research in hospitality
AuthorsVan der Rest, J., Wang, X. and Heo, C.

In this chapter we have provided a comprehensive review of literature pertaining to behavioural pricing and perceived price fairness research in hospitality. The findings presented in previous sections have far-reaching implications on real-world customer-centric revenue management and marketing strategies in a number of areas. First of all, personal fairness is the first opportunity for revenue managers to win over guests. As past and competitor prices are often used as anchor points, aligning rates with these references allows customers to quickly consider a price as fair. Competitive price positioning thus also plays an important role in a value-oriented pricing approach. As guests will be much more accepting of differential pricing when they are familiar with revenue management, it will also be worthwhile to educate guests on the pricing policies of hotels. Secondly, revenue managers need to have a detailed understanding of the value of restrictions and benefits to their different segments. Increasing prices drastically, without adding any value for guests, will push guests to consider this pricing as unfair. If there are price differences, the rates need to be restricted and fenced appropriately. Thirdly, since guests look for who is responsible for unfair prices, it will be useful for revenue managers to communicate this information, as guests consider human motives as less fair than a mechanical cause. Moreover, guests who feel they have a voice and choice in the decision-making process will consider a price as more fair. Revenue managers should therefore ensure that, during the reservation process, guests are able to easily choose their rates. Fourthly, higher awareness of restrictions and benefits at the time of booking leads to a higher perception of fairness. The reservation process should therefore be transparent, meaning that all rates, restrictions, fences, and benefits should be clear during the time of reservation to avoid any surprises at check-out (or check-in). Reservation agents and third-party agents should also be thoroughly checked upon to ensure this. Fifthly, trust acts as a heuristic – it makes consumer decision-making easier and faster. A strong correlation between how well expectations were met for value for money and trust in the hotel group shows the importance of winning over the guests’ perceptions of fairness regarding prices. Revenue management is expected to become more customer-centric, focusing on the lifetime value of the customer and the importance of relationship building rather than the one-time transaction. In this respect, sales and revenue managers need to work together towards the same price fairness goal. Thus, an integrated approach to revenue pricing management and customer relationship management is essential to enable sales, marketing and revenue managers to focus beyond revenue maximisation and work together with all stakeholders to co-create value for customers to sustain incremental profit.

Page range134-154
Book titleThe Routledge handbook of hospitality management
EditorsPantelidis, I.
PublisherRoutledge, Taylor & Francis
Edition1st edition
SeriesRoutledge Handbooks
Publication dates
Print21 Mar 2014
Print07 Apr 2014
Publication process dates
Deposited27 Jun 2013
Output statusPublished
Web address (URL)http://www.routledge.com/books/details/9780415671774/
Digital Object Identifier (DOI)https://doi.org/10.4324/9781315814353-16
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