Sage Journals: Discover world-class research

Abstract

Information asymmetry is a key building block of revenue management. Would-be customers have far less indication of future rates and availability than do the service providers. Even with the relatively transparent pricing on various Web sites, customers do not know the extent of demand for their desired itineraries. However, a tool that allows customers to book specific airplane seats and hotel rooms gives customers a greater indication of existing demand. A test of a simulated hotel-room-selection site confirmed that knowledge of demand influenced participants’ willingness to book. However, that knowledge was most salient when room rates were high. On the other hand, when rates were low, knowledge about demand levels did not influence bookings.

Keywords

advance reservation information asymmetry willingness to book revenue management

Get full access to this article

View all access options for this article.

References

D. K. Shifflet and Associates , “2004 Leisure Visitor Profile,” http://www.tourism.uiuc.edu/itf/DKshifflet/ (accessed September 28, 2005).

P. O’Connor , “On-line Pricing: An Analysis of Hotel-company Practices,” Cornell Hotel & Restaurant Administration Quarterly 44, no. 1 (February 2003): 88-97.

A. Tofa , “Why Book Online? One View,” Travel Weekly 57, no. 45 (1998): 4-5.

J. Olearchik , “Increasingly Internet,” Travel Agent 311, no. 7 (2003): 76-76.

E. Hewitt , “Find the Best Room Prices, Guaranteed,” http://www.independenttraveler.com/resources/article.cfm?AID=493&category=13 (accessed July 20, 2005).

W. J. McGee , “Hotel Strategies,” Condé Nast Traveler, May 2003, p. 78-78.

J. C. Levinson and T. Brandt-Sarif , Guerrilla Travel Tactics: Hundreds of Simple Strategies Guaranteed to Save Road Warriors Time and Money (New York: American Management Association, 2004).

and “Convention Industry Council Seeks Solutions,” Crittenden Hotel/Motel Real Estate News 16, no. 22 (2003): 1-1.

Z. Schwartz , “Revenues and Asymmetric Information: How Tourists’ Uncertainty about Service Quality and Capacity Management Affect Optimal Advanced Booking Pricing” (Paper presented at the International CHRIE Conference, July 27-29, 2004, Philadelphia).

10.

Z. Schwartz , “The Internet’s Online Booking Revolution and the Deteriorating Effectiveness of Hotel Revenue Management Policies: Theoretical and Practical implications,” International Journal of Hospitality Management (forthcoming).

11.

Schwartz , “Revenues and Asymmetric Information.”

12.

Travel Weekly: The Choice of Travel Professionals, no. 1716 (2004): 20-20.

13.

“Why Are Britain’s Hotels So Expensive?”

The Economist, July 4, 2002, p. 31-31

14.

“Information on Cheap Airfare,” http://www.vacationcity.com/costa-rica/air/cheap/ (accessed November 2, 2005).

15.

Schwartz , “Changes in Willingness.”

16.

Small sample t-test for comparing proportions among two independent populations.

The Importance of Information Asymmetry in Customers’ Booking Decisions

Abstract

Keywords

Get full access to this article

References