Gap-alert? Quantity surcharge practices vs. guest expectations

This study explores whether customers are aware of the hotel industry's counter-intuitive practice of quoting higher daily room rates for longer stays. We assess and characterize the relationship between customers' room rate expectations and length of stay (LOS), and contrast them with the industry's pricing practice of quantity-surcharges along a spectrum of stay periods. We find that most guests expect to pay less when they stay longer, hence the gap. Interestingly, we find that the longer the stay, the larger this LOS-induced gap between the hotels' quoted rates and their customers' rate expectations, and that the gap's rise is non-linear.