Impacts of Dynamic Pricing on Customer Satisfaction and Behavioral Intentions in the Hotel Industry
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Abstract
This research examines the effects of dynamic pricing on customer satisfaction and behavioral intentions and reactions in the hotel industry. In specific, it is a study on the impact of price differences, originated from dynamic pricing on the customer’s perception of price fairness, and how perceived price fairness drives customer satisfaction and behaviors.
This study aims to contribute to the field of tourism pricing strategy by examining the impacts of dynamic pricing on customer satisfaction and behavioral intentions of international tourists in Thailand. In particular, this study focuses on a disadvantaged price discrepancy that is claimed to trigger perception of price fairness (Haws & Bearden, 2006). In order words, the study examines the case where consumers realized post-purchase that they were charged a higher price than others receiving the same room and service, and the triggered perception of price fairness, and behavioral intentions and reactions that stem from it. The price difference may vary in terms of magnitude, which can be large or small relative to the amount paid by other customers (Haws & Bearden, 2006). This negative perception of price fairness could lead to customer dissatisfaction that could in returns stimulate some behavioral intentions and reactions, such as repurchase, self-protection, or even revenge; all of which are vital to the long-term competitiveness of the national tourism industry.
This experimental and survey study was conducted in five-star hotels in Bangkok, Thailand, using purposive sampling technique, with a total sample size of 384 tourists. Data collected is then analyzed using a host of statistical analysis techniques, including the standard t-test, the Two-Stage Least Squares (2SLS), and the mediation analysis.
First, It is found that price differences result in unfairness perception among tourists, which in turn lead to a significant and detrimental effect on customer satisfaction. Moreover, it is found that perceived price fairness significantly influences several interesting behavioral intentions and reactions. In particular, our finding shows that poor fairness perception reduces repurchase, increases the likelihood of self-protection and revenge behaviors. It is also found that customer satisfaction mediates the effects of perceived price fairness on revenge intentions. Many business and strategic implications of the results are discussed, including but not limited to the importance of hotel guest experience management and pro-active approach to relationship and disappointment management.
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