Price Strategy, Market Orientation, and Business Performance in the Hotel Industry

Carlos A F Sampaio,José M Hernández-Mogollón,Ricardo Gouveia Rodrigues

doi:10.4018/jgim.2021010105

Abstract

This study seeks to study the relationship between market orientation and business performance and to evaluate the mediating effect of adopting a low-price strategy in this relationship in the hotel industry. A sample from the Spanish and Portuguese hotel industry is used. Results show that the effect of market orientation on business performance is positive and direct. On the other hand, the results do not confirm the mediating effect of a strategy based on low-price in the strength of this relationship. Moreover, results indicate that a price strategy based on low-price is negatively related to hotel business performance.

Highlights

Market orientation literature faced a faster development in the 1990s when Kohli and Jaworski (1990) and Narver and Slater (1990) established the foundations for the following research on this subject
According to the Eurostat (2019b), Spain, in 2017, was the most common tourist destination in the EU for non-residents, with 306 million nights spent in tourist accommodation establishments, or 20.0% of the EU-28 total
The following hypothesis was formulated: H4: The relationship between market orientation and business performance is mediated through a hotel low-price strategy. As it was stated in the introduction section, the purpose of this work is to analyse the relationship between market orientation and business performance and to evaluate the mediating effects of a lowprice strategy on this relationship

Summary

Introduction

Market orientation literature faced a faster development in the 1990s when Kohli and Jaworski (1990) and Narver and Slater (1990) established the foundations for the following research on this subject. The tourism industry depends on the hotels’ ability to provide accommodation and is recognized as a key factor influencing a country or region’s economic potential, employment, and social and environmental variables. This is the case of Spain and Portugal. As for Portugal, the total contribution of Travel & Tourism to GDP was EUR33.5bn, 17.3% of GDP in 2017, and was forecasted to rise to EUR44.7bn, 20.5% of GDP in 2028 (World Travel and Tourism Council, 2018)

Objectives

Methods

Results