D 2019

Price elasticity in the market of accommodation services - empirical study in Berlin, Warsaw and Prague

PETŘÍČEK, Martin

Basic information

Original name

Price elasticity in the market of accommodation services - empirical study in Berlin, Warsaw and Prague

Name (in English)

Price elasticity in the market of accommodation services - empirical study in Berlin, Warsaw and Prague

Authors

PETŘÍČEK, Martin

Edition

Liberec, Proceedings of the 14th International Conference Liberec Economic Forum 2019, p. 238-246, 9 pp. 2019

Publisher

Technical University of Liberec

Other information

Type of outcome

Stať ve sborníku

Confidentiality degree

není předmětem státního či obchodního tajemství

Publication form

printed version "print"

Organization unit

University College Prague – University of International Relations and Institute of Hospitality Management and Economics, Ltd.

ISBN

978-80-7494-482-6

Keywords in English

price elasticity, demand, accommodation, revenue management

Tags

International impact, Reviewed
Změněno: 25/9/2019 16:43, doc. Ing. Martin Petříček, Ph.D.

Abstract

V originále

The submitted paper focuses on the issue of price elasticity of demand for accommodation services between 2014 and 2018. The measurement of price elasticity is performed using a log-log regression analysis. This paper focuses on the markets in the capitals of Germany, Poland, and the Czech Republic, because these markets often have a similar customer base and represent exciting destinations for tourists to Central Europe. One of the results of this paper is that the demand for accommodation services in all monitored destinations is inelastic. This means that a percentage change in price leads to less than one percent change in quantity demanded. This price inelasticity can be a significant indicator of how to change prices in the markets in general so that companies can increase their revenue. The research also shows that we can follow a decreasing trend of price elasticity in the long term. In the past two years, we can also argue that Berlin is showing an increase in the price elasticity of the demand, thus distinguishing it from the other two markets. The results of this research provide background for further analysis and also as input for a detailed study of consumer behavior. Understanding this fundamental feature of consumer behavior (i.e., price-sensitivity) is absolutely necessary for the correct pricing, which is the primary prerequisite for the market of accommodation services to enable companies to increase their expected revenue.

In English

The submitted paper focuses on the issue of price elasticity of demand for accommodation services between 2014 and 2018. The measurement of price elasticity is performed using a log-log regression analysis. This paper focuses on the markets in the capitals of Germany, Poland, and the Czech Republic, because these markets often have a similar customer base and represent exciting destinations for tourists to Central Europe. One of the results of this paper is that the demand for accommodation services in all monitored destinations is inelastic. This means that a percentage change in price leads to less than one percent change in quantity demanded. This price inelasticity can be a significant indicator of how to change prices in the markets in general so that companies can increase their revenue. The research also shows that we can follow a decreasing trend of price elasticity in the long term. In the past two years, we can also argue that Berlin is showing an increase in the price elasticity of the demand, thus distinguishing it from the other two markets. The results of this research provide background for further analysis and also as input for a detailed study of consumer behavior. Understanding this fundamental feature of consumer behavior (i.e., price-sensitivity) is absolutely necessary for the correct pricing, which is the primary prerequisite for the market of accommodation services to enable companies to increase their expected revenue.