Improving Top Hospitality Management: From Bundling Strategies to Price Sensitivity

Purpose: Price is a crucial element in firms’ profitability. Managers have at their disposal a considerable number of price strategies, however setting the optimal strategy is a delicate responsibility. The success of the strategy will depend on how managers identify the price sensitivity of their actual and potential consumers. Firms commonly define bundling strategy to reduce the consumers' price sensitivity. The present master's thesis aims to investigate and identify the price sensitivity of consumers of three and five-stars hotels. Likewise, aims to determine the impact of bundling strategies in decreasing the customers' price sensitivity as well as investigate its relevance to hotels' profitability. Methodology: To achieve the proposed objectives were conducted three studies. In all studies was performed one comparison between three and five-star hotels. In Chapter 1, which the primary goal is price sensitivity' analysis, an ad hoc questionnaire was administered using the Van Westendorp Price Sensitivity Meter. In Chapter 2 was proposed an analysis of the effect of different bundling strategies in reducing price sensitivity and its impact on firms’ profitability. Study 1 aimed to analyse the effect of mixed-leader bundling, and the study 2, the effect of mixed-joint bundling strategy. For both studies, ad hoc questionnaires were developed, where univariate and bivariate techniques were applied. Findings: Through the results of Van Westendorp Price Meter, were evidenced the optimal prices and the range of acceptable prices for three and five-stars hotel. The results from chapter 2 revealed that five-stars customers are less sensitive to mixedleader bundling. According to mixed-joint bundling findings, managers can improve the sales through bundling strategies and consequently the revenues, if they selected an attractive service, such as restaurant services. Research limitations: The size of the samples in all studies could be higher. To price sensitivity study it would be relevant provide additional information that might influence the customer purchasing process. It would be interesting, to the bundling strategies study, acknowledge which services consumers value most, to improve the offered packages. v Practical implications: Findings assist hotel managers to understand the different price sensitivities, according to the hotel typology. Thus, they can manage their prices without the risk of losing their market share and revenues. Moreover, the results help managers in deciding which bundling strategies they should develop, as well as the services to be include, to reach the highest profitability