From Uniform to Bespoke Prices: Hotel Pricing during EURO 2016
36 Pages Posted: 20 Jan 2019 Last revised: 19 Feb 2019
Date Written: January 29, 2019
We investigate the pricing behaviour of firms facing date-specific demand shocks, by focussing on Parisian hotels during a big event, the 2016 European Football Cup. Using a unique dataset, we document an initial propensity to set the same price for rooms on different match dates, although matches involved teams with heterogeneous appeal in terms of the crowd they could attract. Price dispersion across different events, however, emerges as the start of the tournament approaches. We link this behaviour to the evolution of the uncertainty of demand which is substantial several months before the kick-off of the event but is progressively resolved over time. We examine and rule out the alternative explanations according to which uniform pricing early on could be due to managerial decision-making costs.
Keywords: Demand uncertainty, online travel agents, uniform pricing, dynamic pricing
JEL Classification: D22, L11, L93
Suggested Citation: Suggested Citation