October 08, 2018

Price elasticity and how it can influence room rates


Simple in theory but complex in practice, price elasticity is the notion that consumers react to price in an individualised manner.

Rather than only external demand factors such as seasonality and event, price elasticity puts consumer behaviour at the centre of pricing decisions. In other words, consumer behaviour is not always rational; a lower room rate doesn’t always increase bookings.

While we’re not going to dive (too) deep into the economic theory, here’s a primer on price elasticity and how it should influence your hotel’s room rates.

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