Tourists' willingness to pay for an accommodation: The effect of eWOM and internal reference price

Understanding the determinants of consumers' willingness to pay (WTP) is an important challenge especially for practitioners. This study evaluates the effect of external information (eWOM valence and volume) and internal information (internal reference price) on consumers' WTP for an accommodation. The results of an online experiment (n = 766) show a direct effect of valence on WTP which is strengthened by both volume and the internal reference price. Consumers with high reference prices are more sensitive to the effect of an increase in valence. Moreover, internal reference price has a non-linear influence on WTP. The findings suggest the relevant role of eWOM as well as internal reference price in determining consumers' WTP. The inclusion of these two variables in dynamic pricing strategies could lead to greater benefits for hospitality managers.