Making price decisions in tourism enterprises

Abstract

This paper reports on a field study of pricing practices and their relationship to cost accounting in tourism enterprises located in Finnish Lapland. Qualitative interviews were conducted in six tourism enterprises, which varied in size, age, location, line of tourism business, and their ownership structure. The case-specific routines of decision-making were grouped into three main categories, namely, the imitator, the customer enticer, and the strong calculator. The results of the study suggest that only the companies with the strongest competitive position are able to use absorption pricing. Furthermore, as the majority of the studied enterprises take the prices from the leading enterprises, the actual importance of cost accounting is rather limited. The paper also presents evidence to suggest that price decisions are made in regional and inter-regional networks of tourism enterprises.