Dynamic pricing strategies: Evidence from European hotels

How much do hoteliers actually make use of dynamic pricing strategies? We collected data on the price of a single room booked in advance (from three months to a single day), from almost 1000 hotels in eight European capital cities. Pricing strategies were analyzed by means of descriptive statistics, box plots and econometric panel data techniques. The empirical results show that the inter-temporal pricing structure primarily depends on the type of customer, the star rating and the number of suppliers with available rooms.

► We examine the inter-temporal pricing structure in a sample of European hotels.
► We find that the large majority of hotels use some form of dynamic pricing.
► The composition of the clientele is a main driver of the dynamic pricing strategy.
► High star ratings are a quality signal supporting a dynamic premium price.
► Prices increase when fewer hotels with a similar star rating have availability.