Hotel's online rating as a key factor for value-based pricing: the case of Venice

Abstract

The paper addresses to the impact of hotel’s online rating on efficient pricing strategy in hospitality. With the growth and widespread use of online travel platforms, reviews and opinions of previous guests are becoming the main source of information for consumers at the stage of choosing accommodation. Therefore, the hotel’s rating could be considered as an overall assessment of its perceived quality for past and also for future clients. Since the concept of perceived value is the foundation of value-based pricing strategy, it is crucial to understand the mechanism of influence of online reputation on hotel’s pricing power and its performance in general. The relationship between hotel’s rating and prices are studied for the specific case of Venice, the second Italian city by the number of tourists.