Hedonic Motivations and the Effectiveness of Risk Perceptions–Oriented Revenue Management Policies

Abstract

The study proposes that deal-seeking travelers’ perception of risk may have a dual and contradicting impact on expected utility and, consequently, on their propensity to search for a better deal and book the travel product. According to a traditionally utilitarian motivation, a high level of risk and the prospect of negative results reduce expected utility, and they are therefore likely to reduce search activities and increase booking. This study argues that, because of hedonic motivations, consumers may enjoy the risk elements of their search for a better deal and, consequently, may respond to higher levels of induced risk perception by increasing search activities and reducing booking. The study explains how this finding affects the way revenue-managing hotels, which seek to affect their customers’ behavior by inducing risk perceptions, should adapt their strategies.