Add-on pricing approach to hotel guestroom customisation

Abstract

As financial outcomes of service customisation remain somewhat unclear and underexplored in hospitality contexts, this study aims at advancing understanding of how hotel practitioners can refine pricing policies towards customisation to increase economic returns. Through a discrete choice modelling approach, this study informs that hotels might leverage on service customisation of interior characteristics of the room (i.e. sensory attributes) to increase the price of a standard room package while complementing the baseline offering with the sale of customisable cognitive attributes through an add-on pricing scheme.