Abstract
•We explored longer-term contextual factors influencing opaque price discounts.•We used customer-reported transaction data on opaque room rates in Houston.•Factors include hotel class, operation mode, market structure, and online reputation.•Upper-scale and chain-operated hotels offer deep discounts.•Hotels in centralized markets and with better online reputation offer low discounts.
Selling hotel rooms through opaque distribution channels is an effective price discrimination instrument and a common hotel revenue management discounting practice. Similar to non-opaque channels, the opaque discount level and number of rooms are determined based on revenue-optimizing models. This study explores additional determinants, namely longer-term contextual factors that influence deep price discounts offered through opaque selling channels. Using customer-reported transaction data on opaque room rates in Houston between 2008 and 2015, we find that hotel class, operation mode, market structure, and online reputation each shape opaque discount practices. Specifically, upper-scale hotels, chain-operated hotels, hotels in decentralized markets, and hotels with low online reputations are most likely to offer deep discounts via opaque selling.
