Advanced booking and revenue management: Room rates and the consumers’ strategic zones

The advanced-booking generic-strategies decision model is extended in this study to include consumer utility. It identifies the switch points, that is, the room rates and corresponding consumer-expected utilities at which a prospective consumer shifts from one strategic zone to another. The analysis indicates that the hotel benefits the most when the upper boundaries of the first three strategic rate zones are stretched to the right. The wider these ranges, the more likely the consumer is to respond with a favorable decision. The paper discusses eight of the hotel-controlled model factors (such as the size of the penalty for canceling a reservation), demonstrating how they affect the rate zones and the generic booking strategy when manipulated through marketing and pricing efforts. The analysis indicates that these factors have an opposing impact on the various consumer generic strategies. Consequently, the effectiveness and success of such marketing and pricing policies depends on the distribution of consumers on the rate/utility plane.