THE LODGING INDUSTRY. 3
since realized that unlike other products in other business ventures, rooms that failed to secure
some procurement cannot be stored and await future sale. Instead, hotels consider cutting their
room rates for customers during the off-peak season so as to realize an incremental trend in
revenue accumulation and at the same time take care of the price-sensitive clients. Therefore, this
study was commissioned to investigate and establish the relevance of the advanced arguments
that smaller hotels cut their room rates whenever larger hotels do so but the larger hotels do not
feel the pain. Secondly, the issue triggered the investigation to establish whether the independent
and the chain hotels interdepend on each other in terms of price formulation and deciding. The
study is the also interested in establishing how hotels respond strategically to room pricing
decisions made by their rival hoteliers.
Importance of Competitive price interactions and strategic responses in the lodging
industry.
This study is important to the lodging and hotel industry in general due to the
perishability of the services involved. Unsold rooms in hotels cannot be stored for reselling.
Also, hotels experience seasons whereby some periods are off-pick while other periods are pick
periods. Therefore, hotels require a viable pricing strategy that could be critical enough
revolutionize hotel performance.
This paper is also of great importance towards adding value and flesh to the available
research into the topic of hoteling and lodging. The study findings have been structured in a
manner strategic enough to enhance the understanding of competitive pricing and price decisions
and their respective responses by the players in the lodging industry (Chen, Su, & Tsai, 2007).
The study, however, suffers from a number of limitations. To start with, the data used involved
