The moderating effect of seasonality in the hotel industry. Does market concentration favour tacit collusion?

Authors

  • Pedro Aznar Associate Professor Economics, Finance and Accounting Department, ESADE, Business and Law School, Ramon Llull University, Spain. Email: juanpedro.aznar@esade.edu https://orcid.org/0000-0003-4831-8723

DOI:

https://doi.org/10.54055/ejtr.v37i.3515

Keywords:

market concentration, tacit collusion, hedonic prices, seasonality, hotel industry

Abstract

Market concentration is associated with higher prices. However, previous research has not considered whether the market concentration effect on prices is moderated by seasonality in markets where firms switch from peak demand to low demand periods. This study analyzes market concentration effect on prices and price variability in the hotel industry. Through hedonic price models, the paper analyzes the influence of market concentration on hotel prices and how quality, distance to the city center or seasonality influence hotel prices. A higher market concentration is associated with higher prices. The effect of market concentration on prices is 1.7 times higher in the peak demand season than in the low demand season. Price variability between hotels for a given day in a particular market is partially explained by differences in service quality among hotels in the same city but also by the level of market concentration. We find that higher market concentration reduces price variability, a result consistent with the existence of tacit collusion.

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Published

2024-04-12

How to Cite

Aznar, P. . (2024). The moderating effect of seasonality in the hotel industry. Does market concentration favour tacit collusion?. European Journal of Tourism Research, 37, 3711. https://doi.org/10.54055/ejtr.v37i.3515