How do online hotel consumers perceive room rates?

Abstract

While it has been perceived that hotel consumers using online travel agencies (OTAs) are overall price sensitive, a dominant use of OTAs in hotel booking suggests that there are more diverse consumers in terms of price perception. As such, this study investigates the price sensitivity of the Online Travel Agency (OTA) consumer segments, using price sensitivity measurement (PSM) by using factor analysis and cluster analysis. The results showed four OTA consumer segments, i.e., planned bargain seekers, enthusiastic shoppers, deal hunters, and apathetic shoppers. Differences in price sensitivity was confirmed among these segments. This study uncovers the characteristics of OTA consumers who are more (less) price sensitive. By using PSM, this study presents and compares the optimal pricing points across the customer segments in terms of monetary values. Based on the findings, this study provides theoretical and practical implications.