Hotel revenue management and its impact on customers' perceptions of fairness

At the core of revenue management principles lies the concept of demand-based variable pricing. Hotel managers are concerned that pricing hotel rooms according to this concept may alienate customers due to the perceived unfairness of the practice. This study measured the effect of hotel demand-based variable pricing practices on customers' perceptions of fairness. In addition, it examined the moderating effect of information about the hotel's room pricing practices offered to customers at the time of reservation. Contrary to common belief, in most of the scenarios tested, hotel variable pricing practices did not result in lower perceptions of fairness among customers. The practice resulted in significantly lower perceptions of fairness in only one scenario. Moreover, if information on the hotel's room pricing practices was offered to customers at the time of reservation, even that one scenario did not result in lower ratings of perceived fairness.