Strategic consumer behavior in online hotel booking
(A2020-63239)

AUTHORS

Lorenzo Masiero , The Hong Kong Polytechnic University; Giampaolo Viglia, University of Portsmouth; Marta Nieto García, University of Portsmouth

KEYWORDS

strategic consumer; hotel booking; risk attitude

ABSTRACT

The widespread of dynamic pricing in the hotel industry has opened up new opportunities for strategic consumers. Free-cancellation policies enable them to re-book the hotel room at a later time, which is particularly attractive in the case of a future price drop. Building on expected utility and risk attitude theories, this study aims to analyze strategic consumer behavior in online hotel booking. A discrete choice experiment is used to unveil consumer preferences for free-cancellation rate (vs non-refundable rate) under different scenarios (i.e., probability of a price drop, time window and availability of an automatic re-book service). A cluster analysis further helped to identify segments of consumers characterized by different preferences. Interestingly, risk seeking consumers show preference for free-cancellation rate that increases with the availability of an automatic re-book service. Although the time window increases the utility of the free-cancellation rate, such impact is lower as risk propensity increases. The identification and profiling of six distinct consumer segments provide clear implications for industry practitioners.