PRICING MODELS IN A CAPTIVE MARKET: A CASE STUDY OF LCC DORMITORIES

The purpose of this study is to identify the residents’ preference among three pricing strategies: a la carte pricing strategy, limited choice pricing strategy, and bundled pricing strategy. The study analyzes the correlation between the year of study of the dormitory residents and the preferred pricing strategy. It uses an online survey for LCC International University students who were enrolled for the 2015-2016 academic year. A fixed choice set analysis is performed to analyze 126 valid responses. The results show that 42.4% of the respondents prefer an a la carte pricing strategy, contrary to the currently limited choice pricing strategy employed by LCC residency halls. Additionally, the study finds out that the residents are more likely to switch their preference from a bundled pricing strategy to an a la carte pricing strategy the higher their year of study is. Resident preferences for pricing strategies can provide dormitory operators with valuable information on establishing best pricing structures.

Pricing strategies for resort fees: consumer preferences favor simplicity

Purpose – The purpose of this study is twofold: to determine hotel customers’ preference among hotel amenities pricing strategies, specifically a bundled, all-inclusive charge in the form of a resort fee, a limited choice resort fee at a lower price or a la carte pricing, and to determine whether hotel customer prefer bundled or partitioned pricing when faced with a mandatory resort fee. Design/methodology/approach – An online survey of participants aged 18 years and older who had taken an overnight leisure trip in the past six months is conducted. A fixed-choice set conjoint analysis is performed to analyze the 353 usable surveys. Findings – Results of this conjoint analysis show that 67 per cent of respondents prefer bundled pricing over partitioned pricing. Respondents also show higher utility for no resort fee and paying for amenities based on usage instead of being forced to pay a mandatory resort fee. Practical implications – Guest preferences for pricing strategies can provide hotel operators with valuable information on how to establish pricing structures. Results suggest that hotel operators could benefit from presenting a bundled price inclusive of room rates and mandatory fees. Originality/value – This is the only known study that examines mandatory fees in which customers receive additional amenities or services in exchange for an additional surcharge. This study also adds to the literature on pricing research in the hospitality industry.