Dynamic pricing agreements of Norwegian hotels from the corporate accounts perspective
Hyrkäs, Jouni (2011)
Hyrkäs, Jouni
HAAGA-HELIA ammattikorkeakoulu
2011
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201105168153
https://urn.fi/URN:NBN:fi:amk-201105168153
Tiivistelmä
A common problem in the hospitality industry, perishable products and services, has led hoteliers to seek for new strategies in their pricing. Revenue management is a relatively new science that mixes together different revenue optimizing strategies. Dynamic pricing, a part of revenue management, is a familiar concept in the hotel industry and was presented to buyers about a decade ago. Dynamic pricing is already in use with the published daily rates of hotels, and increasingly with corporate clients. In dynamic pricing, the daily rate follows the demand and it is controlled by a revenue manager or sophisticated automated systems. There are buyers who perceive dynamic pricing as a positive value and others who perceive it as a negative value to their business. The question is how hotels can successfully implement a communication strategy that increases their customers’ acceptance towards dynamic pricing.
The purpose of this thesis is to determine the reasons behind the negative perceptions of the corporate customers who rather use static accommodation agreements than agreements based on dynamic pricing. The thesis focuses on buyers who use accommodation services in Norway. This study tries to understand what corporate customers think about the dynamic pricing and how much they know about the topic.
Literature about revenue management and dynamic pricing is scarce. For this reason, the qualitative research method was chosen to support and strengthen the secondary data. The primary data was gathered by interviewing companies in English or Norwegian. The interviews were high-structured, because the author wanted to penetrate the research problem and to find certain patterns in the research sample. The companies were interviewed face-to-face, on telephone or by email.
The results revealed that the buyers are not familiar with dynamic pricing and do not see how they could benefit from it. In general, the customers wanted to continue to use the static corporate agreements and not dynamic pricing. The information they have received from the hotels was mostly in the form of price examples that did not suit their travel profile. Further information and open communication were wished from the suppliers’ side. Dynamic pricing was also seen as harmful for the customer relations, even though modern revenue management should be customer-oriented. The companies acknowledged that dynamic pricing is here to stay and they were willing to test it in the form of hybrid agreements if their key destina-tions were not involved.
The purpose of this thesis is to determine the reasons behind the negative perceptions of the corporate customers who rather use static accommodation agreements than agreements based on dynamic pricing. The thesis focuses on buyers who use accommodation services in Norway. This study tries to understand what corporate customers think about the dynamic pricing and how much they know about the topic.
Literature about revenue management and dynamic pricing is scarce. For this reason, the qualitative research method was chosen to support and strengthen the secondary data. The primary data was gathered by interviewing companies in English or Norwegian. The interviews were high-structured, because the author wanted to penetrate the research problem and to find certain patterns in the research sample. The companies were interviewed face-to-face, on telephone or by email.
The results revealed that the buyers are not familiar with dynamic pricing and do not see how they could benefit from it. In general, the customers wanted to continue to use the static corporate agreements and not dynamic pricing. The information they have received from the hotels was mostly in the form of price examples that did not suit their travel profile. Further information and open communication were wished from the suppliers’ side. Dynamic pricing was also seen as harmful for the customer relations, even though modern revenue management should be customer-oriented. The companies acknowledged that dynamic pricing is here to stay and they were willing to test it in the form of hybrid agreements if their key destina-tions were not involved.