Examining the determinants of room rates for hotels in capital cities: The Oslo experience
Christer Thrane Received (in revised form): 7th November, 2006
Department of Social Sciences, Lillehammer University College, 2626 Lillehammer, Norway. Tel: þ 47 61 28 82 47; Fax: þ 47 61 28 81 70; E-mail: Christer.Thrane@hil.no
Christer Thrane is Professor of Tourism in the Department of Social Sciences at Lillehammer University College, Norway. His research interests include, among other things, quantitative research in the areas of tourism, hospitality and recreation. The author would like to thank Jo Kleiven and the anonymous reviewers for valuable comments to an earlier draft of this paper and Tone Kvamme and Guro Larsson for excellent research assistance. The usual disclaimer applies.
ABSTRACT KEYWORDS: hotels, Oslo, room rates, price hedonics, SUR
Price hedonic theory states that the price for a product may be thought of as an additive function of the various utility-bearing attributes embedded in the product. Within this framework, the present study demonstrates how the room rates for hotels in and around the Norwegian capital of Norway can be linked to certain hotel attributes. Seemingly unrelated regression (SUR) models incorporating nine hotel attributes explain about 70% of the variation in room rates. Of particular importance in this respect, are the attributes mini-bar, hairdryer, free parking and distance to downtown.
Journal of Revenue and Pricing Management (2007) 5, 315–323. doi:10.1057/palgrave.rpm.5160055
INTRODUCTION It is common knowledge that the prices people have to pay for accommodation in hotels vary enormously. Furthermore, most people probably possess a more or less accurate intuition of
what causes room rates to diverge. In this respect, the multidimensional concept of quality is expected to be associated with hotel prices in a more or less linear fashion: a higher quality equals a higher...