Pricing Behaviorand Dynamics in the Lodging Industry[1]Enz]..jpg

For Cathy A. Enz, what makes this research most exciting is less about exact pricing techniques and more about coming up with a strategy.
Beatrice Jin
Beatrice Jin

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Enz’s pricing research is designed to help the industry think about pricing.
Jason Koski (UPhoto)
Jason Koski (UPhoto)

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Enz has studied hotels in good times and in recessions, looking at pricing in segments from luxury to budget hotels around the world.
Lindsay France (UPhoto)
Lindsay France (UPhoto)

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Enz and colleague Kate Walsh began interviewing senior women in hospitality to ask about their careers and gather a sense of their progression.
Robert Barker (UPhoto)
Robert Barker (UPhoto)

Hotel Pricing and Other Strategy Studies

by Alexandra Chang

It was during a discussion with Four Seasons EVP of Marketing, Barbara Talbott, and then President of Smith Travel Research, Mark Lamanno, when Cathy A. Enz, Hotel Administration, saw a research opportunity. The pricing challenges that hotels face were on the minds of many in the industry. This was a decade ago.  

“She says, ‘Boy, the industry really needs to understand what they’re doing, because I don’t think they really understand what they’re doing,’” Enz recounts. “Lamanno says, ‘Well, we’ve got all this data.’ And I say, OK, wait a minute. You’ve got a problem and you’ve got data. I can do something with that!”

Pricing Behavior in the Hotel Industry

So began a decade-long—and still continuing—thread of research looking at pricing behavior and dynamics in the lodging industry. Enz has published numerous papers on whether and how price affects demand in major hotel markets across the globe.

She and collaborator Linda Canina, Hotel Administration, have looked at pricing in Asia, Europe, and North America; they’ve studies hotels in good times and in recessions; and they’ve looked at pricing in different segments, from luxury to budget hotels. “We’ve basically, over the last decade, turned it upside down and backwards,” Enz says.

The researchers found that in the hotel industry, demand is somewhat price inelastic, meaning that demand does not rise as prices drop. They discovered that aggressive discounting did not help to raise RevPAR—an industry term that means revenue per available room (total room revenue divided by total number of available rooms). In another study, they examined price fluctuation and how pricing above or below competition affected success. After building several models of performance and revenue, they found that hotels that had less price fluctuation and were positioned higher than their competition did best.

Most recently, Enz and Canina have published a paper on the European market, looking at data from 2004 to 2013. Much like what they’ve found in previous studies, demand for European hotels is price inelastic. One variation they found between North America and Europe was in price fluctuations. In the U.S. market, price fluctuation is significantly negatively correlated to RevPAR; it does not have the same significance in the European market.

“This whole set of research was designed to help the industry think about pricing,” Enz says. “It is a real-world problem and an opportunity to use a whole lot of data from the industry. It’s a body of research that really has helped people in the industry change their behavior, and that’s the best part.”

And What about Golf Courses?

Now Enz is taking the pricing studies to an entirely new market—golf courses, where many unique industry challenges exist. For example, golfing is priced in 15-minute increments. There are specific time slots that golfers most desire. There are various vendors, from the course to third-party providers to membership options. To Enz, what makes this research most exciting is less about exact pricing techniques and more about coming up with a strategy.

“As a strategist, I’m saying you have to create unique value rather than getting stuck in this pricing piece,” she says. “You have to find some way to build a unique or differentiated offering. Then you find the right price.”

Women in Gendered Organizations

As the Lewis G. Schaeneman Jr. Professor of Innovation and Dynamic Management, Enz is also interested in how companies can reach outside the boundaries of their organization to stimulate greater innovation. Enz has begun exploring how gendered role identities, self identities, and the structuring of organizations affect women’s success in the hospitality industry—although the research could be applied to other areas.

Enz and colleague Kate Walsh, School of Hotel Administration, began interviewing senior women in hospitality last year. The goal was to ask them about their careers and gather a sense of their progression. The women had several classic stories of struggling when they had kids, and having challenges when dealing with flexible work relationships and autonomy. But when asked what they thought organizations could do differently to enhance women’s roles and opportunities, few had answers.

“We’re asking ourselves, why is it so hard to think about changing these organizations, and why is it that many of the ways that we have attempted have actually gotten just the opposite results?” Enz explains.

“As a strategist, I’m saying you have to create unique value rather than getting stuck in this pricing piece  . . . find some way to build a unique or differentiated offering.”

Enz and colleagues are trying to puzzle through this problem and believe that one of the reasons it’s so difficult to come up with solutions is that most of the practices today have tended to marginalize women. Think women-only mentorship programs or offices dedicated to women’s development. “Putting them all in a group together really does not help them in any way, shape, or form because their self identities now become defined by that marginal status,” Enz says.

The problem seems to be in part attributable to the fact that women are asked to alter their self and role identities to fit gendered organizations, Enz says. As men lead companies, male identities are attached to positions of status. “The men who enter and look and act and say the right things, that fit gendered roles, are then perceived better in work worlds,” Enz says. “They move forward in a virtuous cycle. And women are always busy trying to reconfigure self—‘I can’t be this much of this and I need to be more of that’—and at some point they either find that it’s something they learn how to do or they exit.”

Though the research work is still in its infancy, the ultimate goal is to better understand the impact that organizational hierarchies and structures have on role and self identities in the workforce. They’d also like to provide practical guidelines to organizations for improving the ways in which work identities are structured.

Throughout her research, Enz says that taking on challenges that exist in the overlap between academia and industry is most important. “I believe that if we’re going to be relevant and maintain this wonderful passion around doing research, our research needs to be close to other communities of practice.”