This research evaluated how rate transparency, component bundling, price, and savings of vacation packages influence online purchase decisions. Subjects chose between 12 pairs of Cancun vacation packages, one transparent (individual component pricing displayed) and one opaque (total package price only). The price and savings of the packages were systematically varied in a within-subjects design using a simulated online booking questionnaire. Price was the strongest determinant of choice, but transparent pricing increased favorable impressions of fairness and value. Transparent pricing was most effective when the pricing was different from an opaque alternative, enhancing the impact of a lower price and mitigating the impact of a higher price. There appears to be minimal benefit to transparent pricing if it is the same as an opaque alternative, and it can be detrimental if the savings is not revealed. Online travel providers can use the results to enhance their pricing strategies through the display of information.
Beltramini, R.F. ( 1983). Student surrogates in consumer research. Academy of Marketing Science, 11, 438-443.
2.
Calder, B.J., Phillips, L.W., & Tybout, A. ( 1982). The concept of external validity. Journal of Consumer Research, 9, 240-244.
3.
Carroll, B., & Sigauw, J. ( 2003). The evolution of electronic distribution: Effects on hotel intermediaries. Cornell Hotel and Restaurant Administration Quarterly, 44, 38-50.
4.
Carroll, W.J., Kwortnick, R.J., & Rose, N.L. ( 2007). Travel packaging: An Internet frontier. Cornell Hospitality Reports, 17, 4-16.
5.
Choi, S., & Mattila, A.S. ( 2006). The role of disclosure in variable hotel pricing: A cross-cultural comparison of customers’ fairness perceptions. Cornell Hotel and Restaurant Administration Quarterly, 47, 27-35.
6.
Crislip, K. ( 2010). Top 10 Spring Break Hot Spots for 2010. Retrieved from http://student-travel.about.com/od/springbrea1/tp/to_spring_break.htm
7.
Fiske, S.T., & Taylor, S.E. ( 1991). Social cognition (2nd ed). New York, NY: McGraw Hill.
8.
Granados, N., Gupta, A., & Kauffman, R. ( 2006). The impact of IT on market information and transparency: A unified theoretical framework. Journal of the Association for Information Systems, 7, 148-178.
9.
Grewal, D., Iyer, G.R., Krishnan, R., & Sharma, A. ( 2003). The Internet and the price-value-loyalty chain. Journal of Business Research, 56, 391-398.
10.
Guiltinan, J. ( 1987). The price bundling of services: A normative framework . Journal of Marketing, 51, 74-85.
Heeler, R.M., Nguyen, A., & Buff, C. ( 2007). Bundles = discount? Revisiting complex theories of bundle effects. Journal of Product & Brand Management, 16, 492-500.
13.
Hosmer, D.W., & Lemeshow, S. ( 1989). Applied logistic regression. New York, NY: Wiley.
14.
Jaccard, J. ( 2001). Interaction effects in logistic regression (Series: Quantitative Applications in the Social Sciences, 07-135). Thousand Oaks, CA: Sage.
15.
J.D. Power & Associates. (2008, November 25). While more travelers are booking reservations online, market share among independent travel web sites remains flat. Retrieved from http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?ID=2008253
16.
Kim, J., Bojanic, D., & Warnick, R. ( 2009). Price bundling and travel product pricing Practices used by online channels of distribution. Journal of Travel Research , 47, 403-412.
17.
Law, R., & Hsu, C. ( 2006). Importance of hotel website dimensions and attributes: Perceptions of online browsers and online purchasers. Journal of Hospitality & Tourism Research, 30, 295-312.
18.
Lynch J., Jr., & Ariely, D. ( 2000). Wine online: Search costs affect competition on price, quality and distribution. Marketing Science, 19, 83-104.
19.
Mattila, A.S., & Choi, S. ( 2005). The impact of hotel pricing policies on perceived fairness and satisfaction with the reservation process. Journal of Hospitality & Leisure Marketing, 13, 25-39.
20.
Menard, S. ( 1995). Applied logistic regression analysis (Series: Quantitative Applications in the Social Sciences, 07-106). Thousand Oaks, CA: Sage.
21.
Miao, L., & Mattila, A.S. ( 2007). How and how much to reveal? The effects of price transparency on consumers’ price perceptions. Journal of Hospitality & Tourism Research, 31, 530-545.
22.
Myung, E., McCool, A.C., & Feinstein, A.H. (2008). Understanding attributes affecting meal choice decisions in a bundling context. International Journal of Hospitality Management, 27, 119-125.
23.
Naylor, G., & Frank, K. ( 2001). The effect of price bundling on consumer perceptions of value. Journal of Service Marketing, 15, 270-281.
24.
Noone, B.M., & Mattila, A.S. ( 2009). Hotel revenue management and the Internet: The effect of price presentation strategies on customers’ willingness to book. International Journal of Hospitality Management, 28, 272-279.
25.
Ramirez, E., & Goldsmith, R.E. (2009). Some antecedents of price sensitivity. Journal of Marketing Theory and Practice, 17, 199-213.
26.
Rewtrakunphaiboon, W., & Oppewal, H. ( 2008). Effects of package holiday information presentation on destination choice. Journal of Travel Research, 47, 127-136.
27.
Rohlfs, K.V., & Kimes, S.E. ( 2007). Customers’ perceptions of best available hotel rates. Cornell Hotel and Restaurant Administration Quarterly , 48, 151-162.
28.
Romero, D. ( 2008). Top ten spring break destinations. Retrieved from http://www.macquil.com/articles/springbreak08.php
29.
Sheng, S., Parker, A.M., & Nakamoto, K. ( 2007). The effects of price discount and product complementarity on consumer evaluations of bundle components. Journal of Marketing Theory and Practice, 15, 53-64.
30.
Stremersch, S., & Tellis, G.J. ( 2002). Strategic bundling of products and prices: A new synthesis for marketing. Journal of Marketing, 66, 55-72.
31.
Sweeney, J.C., Soutar, G.N., & Mazzarol, T. ( 2008). Factors influencing word of mouth effectiveness: Receiver perspectives. European Journal of Marketing, 42, 344-364.
32.
Yavas, U. ( 1994). Research note: Students as subjects in advertising and marketing research. International Marketing Review, 11, 35-43.
33.
Zeithaml, V. ( 1988). Consumer perceptions of price, quality, and value: A means-end model and synthesis of evidence. Journal of Marketing , 52, 2-22.
34.
Zhu, K. ( 2002). Information transparency in electronic marketplaces: Why data transparency may hinder the adoption of B2B exchanges. Electronic Markets, 12, 92-99.
