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Myth of early booking gains

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Journal of Revenue and Pricing Management Aims and scope

Abstract

This paper investigates the relationship between booking lead time and hotel room rates while controlling for various booking, room and hotel characteristics. Data are based on big data drawn from a hotel reservation database covering about 123,000 bookings over a 5-year period. Quantile estimations for online bookings show that early bookings are associated with the highest room rates, while late bookings have the lowest ones. For lower priced rooms of leisure guests booked offline, there is a U-shaped relationship with the lowest prices booked between 10 and 24 days before the check-in day. Similarly for business guests, a U-shaped pattern can be found for high-priced bookings. Overall, price variations between bookings at different points in time range between 10% for external online bookings and up to 28% for offline bookings of leisure guests. The results for hotel bookings stand in contrast to empirical evidence for airfares and train tickets.

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Fig. 1

Source Hotel booking system. Author’s calculations

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Acknowledgements

We would like to thank Dan Fesenmaier, Eva Hagsten, Raffale Scuderi, Sandro Montresor, the participants of the CBTS 2016 in Brunico, the participants of the 25th Nordic Symposium on Tourism and Hospitality 2016 in Turku, and the seminar participants at the Kore University of Enna May 2016 and the 6th International Conference of IATE in Rimini June 2017 for helpful comments on an earlier version of the paper. We are also grateful to three anonymous referees for detailed and constructive comments on the previous version and to the hotel manager for providing access to the hotel booking data. The authors would like to thank Tess Landon for careful proofreading of the manuscript.

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Authors and Affiliations

  1. Austrian Institute of Economic Research (WIFO), Arsenal Objekt 20, 1030, Vienna, Austria

    Martin Falk

  2. Multidimensional Tourism Institute, University of Lapland, P.O. Box 122, 96101, Rovaniemi, Finland

    Markku Vieru

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  1. Martin Falk
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  2. Markku Vieru
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Correspondence to Markku Vieru.

Appendix

Appendix

See Fig. 1 and Tables 1, 2 and 3.

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Falk, M., Vieru, M. Myth of early booking gains. J Revenue Pricing Manag 18, 52–64 (2019). https://doi.org/10.1057/s41272-017-0134-9

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  • DOI: https://doi.org/10.1057/s41272-017-0134-9

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