An Analysis of Hotel Room Pricing

<p>This empirical study was designed to identify specificity in hotel room pricing in the hotels of the Black Sea and the hotels of the Republic of Crimea. There are following tasks that were emphasized to achieve this goal: an analysis of the economic literature to find the appropriate methodology, a research of the hotel room market of the two regions, the identification of key factors influencing the price per hotel room that can be compared between the regions with the effects of these attributes. A retrospective analysis of the literature lit the path from idea to development of the hedonic regression analysis. The idea of the product as a set of attributes was firstly proposed by Lancaster (1966). Carvell, Herrin (1990) were first to apply the hedonic approach in the hotel room market. This method was put into practice using a representative sample of hotel room offers of the Black Sea coast and the Republic of Crimea, consisting of 410 observations, representing 38 hotels with sets of hotel and room attributes with season factor. There were identified key factors affecting the hotel room price, which were coded according to their presence of factors to the room category and transferred to the econometric model. Econometric model explained the price for accommodation as the sum of the effects of certain attributes. They are the external factors of the hotel, such as the distance from the beach and size; room categories, weighted with index of the level of hotel service as the number of the stars; and factors that do not depend on the level of comfort of the hotel such as square of the room. This type of model allows determining the influence of the republic of Crimea on the total sample, which led to the identification of factors that reflect the specifics of the region of Crimea. They were positively influencing attributes such as the presence of facilities throughout the hotel and room categories &quot;Standard +&quot;, &quot;Suite&quot;, &quot;Lux +&quot; and &quot;Business class&quot;; adversely affecting attributes turned to be categories &quot;Economy&quot;, &quot;Standard&quot; and &quot;Deluxe&quot;, room area and a greater distance from the hotel to the beach. Consideration of the seasonality helped to find a significant positive impact on the price of accommodation in the room during the season and high season in the Republic of Crimea. This study identified certain factors that may affect the individual&#39;s decision about selecting the region of the rest, time and living conditions depending on individual`s preferences and constraints.</p>