The impact of cultural orientation on perceived fairness over demand-based pricing

Abstract

Revenue management practices are now being implemented by hotel firms on a global scale. This requires a finer understanding of how different cultures will relate to perceived unfairness that stems from the inequities inherent in demand-based pricing. In this context, individualism and collectivism as cultural constructs have been used extensively in cross-cultural research. These constructs are manifested with vertical and horizontal orientations that distinguish social patterns based on the acceptance of a hierarchy or conversely the preference over equality. The purpose of this study was to examine the relationships between vertical and horizontal orientations of individualism and collectivism with perceived price fairness over demand-based pricing. Findings indicate that vertical individualism has a significantly positive relationship with perceived price fairness. This can be attributed to the inherent acceptance of inequality in this cultural dimension combined with the emphasis of the individual over the collective unit. Marketing implications for lodging managers are discussed.