If you book more nights in a hotel, might you get a deal? You might think so, but research from the University of Delaware’s Alfred Lerner College of Business and Economics found that hotels increase their pricing for longer stays.
“Sometimes, hotel pricing practices are in contrast to what customers think is reasonable or fair,” said Zvi Schwartz, chairperson for the university’s department of hospitality business management. “For example, we take it for granted that in periods of high demand, hotels charge more, but why? The only reason is that they can. We live in a society that embraces these practices. Not just in hotels but really in every industry: When they face higher demand they increase prices.
“What we found with hotels is similar to when you go to the supermarket, and assume that if you buy larger packages you will save money,” Schwartz said. “But you don’t always save. We just want customers to be aware that this gap exists.”
Schwartz, with graduate students Arash Riasi and Xuan Liu surveyed 600 respondents online and compared these responses to the findings of a survey from earlier research they had conducted. They analyzed how much guests expect room rates to change for stays beyond one night, and in cases where there was a difference between customer expectation and pricing practices, what the difference meant for different ranges of stay.
They found that few consumers are actually aware of the practice of quantity surcharging at hotels. Most consumers believe that the longer they stay at a hotel, the deeper the discounts they will receive.
The researchers said it is likely that the hotel industry is aware of the gap between customer expectations and their pricing practices, but without more awareness and pushback from consumers, the practice of quantity surcharging is unlikely to change.
“Gap-Alert? Quantity Surcharge Practices vs. Guest Expectations” was published in the International Journal of Hospitality Management.