The peculiar impact of higher room rates on customers' propensity to book

This study's goal is to examine how an intensified room rate signal affects customers' perceptions, their propensity to book, and consequently hotels' revenue maximization.

Subjects were asked to assess quality, sellout risk and the likelihood of getting a better deal based on an advanced booking scenario, where the signal's intensity was manipulated through the level of uncertainty. Analysis was conducted using a GLM multivariate procedure and a polytomous universal model.

The results suggest that high quoted rates might affect customers' perceptions, their propensity to book, and consequently the hotel's revenues. Surprisingly, the impact of the high room rate signal on the sellout risk perception reversed its direction with the intensified signal.

The results imply that the maximal achievable revenue levels reported in a previous theoretical study ought to be re‐calculated because the assumptions used were not supported by the study's findings.

The study demonstrated yet again that price affects the booking decision beyond the monetary value. It sends a signal that affects several perceptions and shapes the consumers' booking decision. Moreover, the intensity of the signal might change the direction of the impact.

The study is a first attempt to examine price signal intensity and the impact of the signal's strength in an advanced booking environment. The theoretical and practical implications underscore the need to better understand the complex impact that price changes have on consumer reactions and consequently on the effectiveness of hotels' revenue management policies.