Exploring the Role Of Human Judgment in Making Discount Decisions in the Lodging Industry

Abstract

This study assesses the process of making pricing decisions, specifically discounts, in the lodging industry. The study applied a qualitative technique employing structured interviews of hotel managers in the United States. The assessments included the narration of events, stages, and cycles of choices made by hotel managers. The findings of the study enhanced the understanding of how management's discount choice was constructed. In addition, this study identified the habitual management practices in the lodging industry such as “less-than-35 rule,” “trial and error,” and “follow suit.” To confirm the findings from the interviews, a follow-up study was conducted. The survey was designed to learn what kinds of information managers rank highly when considering price adjustments in their operations. Different rankings on information attributes among departments were investigated; results show that managers from different departments rank some information elements differently. Learning the process of a discount choice provided new insights on managerial resources and capabilities required to set and change prices in the lodging industry.