Revenue management application in the hotel sector using conjoint analysis

Abstract

[eng] This research focuses on investigating which revenue management related attributes, and the combination thereof, are most important to customers of leisure hotels before making a booking decision, applying a choice-based conjoint model. This study contemplates the upscale hotel market (4star and 5star), focusing on the revenue management attributes Price/Night, Complementary Services Included, Early Discount and Cancellation Policy, which were derived from a preliminary study on Mallorca. Research findings show that respondents have the highest utility levels for a cancellation policy allowing for full refund, as well as the complementary service of breakfast included in the price. Third comes the lower price/night with a considerably lower utility. The aggregated importances show that attribute “Cancellation Policy” ranked highest, closely followed by “Complementary Services Included” and, with a distance, Price/Night. These findings suggest that customers’ booking decisions are most influenced by the cancellation policy and suitable complementary services included and not foremost by price. In addition, findings show that referrals in shape of customer reviews and recommendations from friends form an important part in the decision making process of customers and should therefore receive attention accordingly from hotels and managers.