The Relative Use of Contextual and Temporal Reference Price Components in Hotel and Airline Purchases

Abstract

Do consumers rely more on past prices paid or competitor’s prices when evaluating hotel or airline prices? This research addresses this question by examining the relative use of contextual reference price components versus temporal reference price components for telephone, Internet-proprietary (e.g., Hilton.com), and Internet-third party (Expedia.com) hotel and airline purchases. Furthermore, the effects of brand loyalty, purchase frequency, and the likelihood of unavailability on the balance between contextual and temporal cues are also explored. A scale is developed to measure temporal and contextual cues. Results indicate that contextual cues dominate over temporal cues the most with Internet-third party, less with Internet-proprietary, and least with telephone purchase situations. Also, the study finds that contextual cues dominate the most over temporal cues for infrequent purchasers and for nonbrand loyal purchasers.