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Advisor(s)
Abstract(s)
Purpose – The aim of this paper is to analyze and compare the effect of different hotel characteristics
and room attributes on room rates of hotels in the cities of Lisbon and Porto, the capital and second most
important city in Portugal.
Design/methodology/approach – Using the hedonic pricing method, hotel characteristics are
decomposed and analyzed, giving us the perception of the impact of each hotel attributes on the room
rates and the people’s willingness to pay for this. Ordinary least square regression analysis was applied
to the hedonic price model to find which variables could explain differences in the hotel room rates in
Lisbon and Porto.
Findings – The results suggest that in Lisbon and in Porto, a number of common characteristics have
significant effects on consumer willingness to pay for a stay in a hotel as star rating, consumer rating
and the room size. In Porto, the existence of a fitness centre and in Lisbon, the distance to the city centre
are also attributes that create a premium in room rates.
Practical implications – The knowledge of the most valued characteristics by consumers is an
important tool for hotel managers to define a price strategy. Also important is the knowledge of the
attributes that provide more added value for consumers as these should be taken into account in new
investment decisions.
Originality/value – This study highlights the implications of the way one defines and measures
qualitative hotel characteristics in hedonic pricing. Although the hedonic method has been applied in
several studies, to our knowledge, in Portugal, there are few studies applied only to hotel room rates, and
there are no studies comparing hotel room rates in different Portuguese cities. Moreover, the research
highlights the critical role of a proper definition and measurement of the variables in hedonic pricing in
general and the hotel star in particular.
Description
Keywords
Tourism Hotel attributes Hedonic prices Hotel room rates Lisbon Porto