Reducing Unrealistic Optimism: The Effects of Product Scarcity Cues on Early Hotel Booking Intentions

Abstract

Hotel consumers’ unrealistic optimism leads them to postpone their bookings until the last minute, expecting a better price. However, the frequent use of last-minute deals can impact a hotel’s profitability, and little is known about how to reduce consumers’ unrealistic optimism to encourage earlier bookings. This research examines strategies to reduce hotel bookers’ unrealistic optimism to promote early bookings using three experimental designs. Study 1 demonstrates that hotel consumers’ price change predictions are nearly identical to predictions based on best-case situations. The findings of Study 2 indicate that popularity cues motivate consumers to book early, but only if they have the option to pay later. Study 3 suggests that when a hotel’s price is relatively high, supply-driven scarcity cues are more effective than demand-driven cues in convincing consumers not to postpone bookings. Taken together, these findings provide important insights into developing an operational marketing strategy to encourage advance bookings.