Dynamic pricing and perceived fairness: a case study at a hotel on the West Frisian island of Vlieland, The Netherlands

Abstract

ABSTRACT The use of dynamic pricing strategies can have a tremendous impact on the hospitality industry. Understanding the variety in the type of customers and the perceptions of customers concerning the fairness of dynamic pricing is essential. This study aimed to investigate how a dynamic pricing strategy could positively affect the demand for a hotel located on the West Frisian island of Vlieland. This research was divided into four topics: determining segments and corresponding booking processes, the importance of price when booking, perceived fairness of price change and how to influence booking behaviour. This research used a survey that was presented to customers of the hotel in this case study for six weeks. Three hundred and sixty-eight customers completed the survey. The evidence suggests that implementing a more elaborate pricing strategy would positively affect the demand for this hotel. While price is still an essential factor when booking, it is concluded that this is not the most important consideration for consumers. If a pricing strategy is implemented, the hotel can improve the occupancy rate and generate more hotel revenue while simultaneously keeping the consumers satisfied. Relevant managerial implications include implementing peak load pricing to influence demand.