Abstracts for Session 22

Tourism Economics and Management

 

 

Title: Optimal introductory pricing of season passes

Authors: Per Kristian Alnes, Erik Haugom, Gudbrand Lien, Ørjan Mydland, Iveta Malasevska, and Andreas Hinterhuber

Affiliation: Inland Norway University of Applied Sciences

 

In this paper we propose a parsimonious model that can be used to calculate the optimal introductory price for service season passes when also considering the expected customer lifetime value. We view the introductory pricing problem as an investment decision with uncertain future cash flows. In this setup, the initial investment is the foregone income of lower period 1 revenues to generate higher expected cash flows from subsequent periods. The theoretical framework also relates to the two-part tariff model where the decision problem is to set the entrance fee for new customers such that the expected total profit is maximized. We empirically test the model using data from a survey experiment in the alpine skiing industry. The results show that the optimal introductory price for a season pass is more than 50% lower when including the expected customer lifetime value compared to the price obtained from just maximizing the short term (period 1) profit. We also perform a sensitivity analysis to illustrate how sensitive the results are to changes in the price-response function, expected retention rate, and the project discount rate.  Managers of services that offer season passes can use the proposed framework to set the right price in the future. 

 

Key words: Introductory pricing; season pass; customer lifetime value; 

 

 

Title: Adding new research method to the debate: the competition between Airbnb and the hotel industry   

Authors:  Jinghua Xie and Sigbjørn Tveterås 

Affiliation: University of Stavanger, UiT/The Arctic University of Norway

 

Together with global Airbnb growth, the debate on whether Airbnb is a threat to hotel accommodation is substantially increasing. In this study, we participate in this debate by first questioning the research method of using the hotel performance indicators in measuring the impacts of Airbnb growth on the hotel industry in literature. We use equilibrium displacement models (EDM) to illustrate that the Airbnb growth has increased the total supply of commercial accommodation, which has a negative effect on hotel performance so far if there is a substitution effect between Airbnb and hotel rooms. However, this negative effect is offset by the positive effect of the growing total demand for accommodation because of the growing tourism demand worldwide. This means measuring Airbnb’s impact on the hotel performance metrics without isolating other factors’ effects is spurious and therefore gives biased results. The study then proposes a new econometric method of vector error correction model (VECM) for a cointegration test with a case study in the Norwegian market. This method has been widely used by economists in testing market linkage between different markets. The method is used to test the market linkage between the Airbnb and hotel markets in Norway. The test results suggest a substitution effect exists between Airbnb and hotel rooms. This means hotel and Airbnb rentals compete in the same market, although they are not perfect substitutes.

 

 

Title: Effects of early-bird discounts on alpine skier demand 

Author: Per Kristian Alnes

Affiliation: Inland Norway University of Applied Sciences

 

Early-bird tickets provide savings for customers who decide to buy the product or service in advance of usage, and it enables the provider to utilize its relatively fixed capacity better. According to standard revenue management practice, the earlier the pre-booking period is, the lower is the price, and the longer the customer waits, the higher is the price. This pricing tactic gives the customer a choice problem involving uncertainty. For an outdoor activity, this uncertainty is amplified by varying weather conditions. This revenue management strategy is starting to emerge at ski resorts worldwide, but it is implemented in different ways. The extant literature on optimal early-bird pricing within the alpine skiing industry is scarce. The purpose of the present paper is to calculate optimal discount levels for alpine ski passes for various day-ahead booking times. We use survey data collected in the ski season 2019/2020 and experimental data collected in the season 2020/21 to estimate unique price-response function for various prebooking horizons. The price-response functions are used in a non-linear programming model to calculate the optimal early-bird prices. We also consider important aspects such as demand shifting and capacity allocation. The preliminary results suggest an optimal discount ranging from approximately 20 percent when booking 1 day in advance to approximately 40 percent when booking 2 months in advance. Shifts in demand caused by this type of price differentiation result in other optimal prices. 

 


Title: Tracing consumption pattern of cruise tourists in Copenhagen through GPS technology

Authors: Caterina Sciortino, Mauro Ferrante, Stefano De Cantis, and Szilvia Gyimóthy

Affiliation: University of Palermo, Copenhagen Business School

 

This paper aims at analyzing the relationship between tourists’ spatial behaviour and expenditure at the destination by means of an integration of traditional questionnaire-based survey and GPS technology. The complex information derived from GPS tracking devices are analyzed through the implementation of various algorithms in order to synthesize key characteristics of the itinerary undertaken. As a case study cruise passengers’ behaviour in the city of Copenhagen are analyzed based on empirical data collected in 2018 and 2019. The relationship among cruise passengers’ expenditure at the destination, socio-demographic characteristics and mobility is analyzed through logistic regression models. The results show the relevance of spatial behaviour on expenditure patterns. In particular, stop activities are strongly associated with expenditure. Consequently, an analysis of stop locations is performed in order to highlight locations in which is likely that most of the expenditure is concentrated. The proposed approach is of relevance both from the methodological perspective, related to the analysis and synthesis geolocational and survey data. It also contributes to a more nuanced conceptual understanding of spatiotemporal consumption and equally bears upon applied value with reference to destination marketing and management implications. 

 

 

Title: Urbanization and Seasonality of Tourism Businesses

Authors: Sigbjørn L. Tveteraas and Oddne Skrede

Affiliation: University of Stavanger

 

This study investigates links between urbanization trends and tourism seasonality. Figure 1 shows UN’s projections of urbanization until 2050. Population growth in rural areas is expected to stagnate and even become negative, while the growth in urban areas is expected to rise with undiminished strength. These precarious prospects for peripheral tourist destinations make it important to analyze the impact of urbanization on the tourism season and tourism businesses’ earnings, particularly in view of UN’s projections for global migration to urban areas. The analysis uses hospitality data the municipal level in Norway from 2007 to 2018. The empirical findings show that the length of the hospitality accommodation season will increase in growing urban and contract in areas with a waning population size, which typically are rural areas. Moreover, the results show that increasing seasonal fluctuations in municipalities reduces both total hotel room revenue and revenue per available room. The revenue reductions are driven by volume effects and not by price effects. Finally, Norwegian hospitality firms situated in municipalities with alpine skiing appear to receive a revenue compensation for a shorter season through a higher RevPAR. This result suggests that unique tourist attractions and experiences can compensate for the drawbacks of shorter seasons through visitors’ higher willingness to pay. 

 

Keywords: Tourism seasonality, urbanization, hospitality revenue, panel data models, alpine skiing, Norway

 

 

Title: The Wisdom of Tourist Expert Crowds

Authors: Sigbjørn L. Tveteraas, Sindre Lorentzen and Jinghua Xie

Affiliation: University of Stavanger

 

Research on collective intelligence show that crowds often are more accurate than experts when making judgements. This is particularly relevant when knowledge is dispersed. In tourism, this typically describes the situation of knowledge about tourism demand in a destination where there are many micro businesses and SMBs. All businesses have relevant information about the tourist market, but few if any has a complete picture of the different tourist segments. The ‘wisdom of crowds’ captures the phenomenon that the when the knowledge and perspectives of different agents are aggregated into a crowd prediction, that prediction can be highly accurate. Collective intelligence is even more relevant during the COVID-19 pandemic since historical information is of limited value in forecasting demand. Forecasts are normally of low accuracy if yesterday’s data are not representative of tomorrow. In this study participate tourist experts from accommodation, transportation, tourist experiences and other tourist businesses. They make individual judgements about the demand for air passenger transportation, hotel accommodation, and Airbnb for one, two and, three months ahead in the Stavanger region. Different techniques are used to aggregate the information including the arithmetic mean, median and a pivoting technique (Palley & Soll 2019). The results show that all aggregation techniques outperform the mean. Moreover, the results support the that knowledge is dispersed and that forecasting accuracy increases when predictions are aggregated.  

 

 

Title: Can Generation Z Be Engaged? The Role of Leaderships Styles and Psychological Capital

Authors: Furkan Arasli, Natalia Sigaeva, Mert Unur, and Huseyin Arasli

Affiliation: Auburn University, Eastern Mediterranean University, University of Stavanger

 

Currently one of the main problems of the tourism and hospitality industry is the high staff turnover, but in the future, the problem may worsen as a result of generational change, since the new generation of employees (Gen Z) has different values and needs. Thus, this research considers the effect of a servant (SL) and authentic (AL) leadership styles on work engagement (WE) of Gen Z' employees and the mediating impact of Psychological capital.  The data were collected in the one of the most touristic city of Krasnodar, Russia, among 393 Gen Z employees who had at least six months of work experience in the hospitality industry. The Structural Equation Modeling, bootstrap analysis, and descriptive statistics were employed to analyze the data. The results showed that both types of leadership have a direct positive effect on PsyCap of Gen Z' employees and their WE. However, in comparison, AL has a greater effect on the employees’ PsyCap and WE than SL. Also, the result indicated that PsyCap has a partial mediating impact on the relation between the leaders and Gen Z employees' WE. The findings of this study contribute to the development of the WE system under the influence of PsyCap on Gen Z employees in the tourism and hospitality industry. 

 

Keywords:  Generation Z, Psychological Capital, Work Engagement, Leadership Style, Russian Federation 

 

 

Title: The dark side of exerting True leadership and Job Security in Nordic hospitality setting? A moderated mediation model

Authors: Mert Unur, Huseyin Arasli, Furkan Arasli, and Natalia Sigaeva

Affiliation: University of Stavanger

 

The job-related antecedents of positive behavior are evidenced, but less is known about cross-domain outcomes, specifically how authentic leadership (AL) and high-performance work systems (HPWS) may affect absenteeism. This empirical study aims to address this unexplored side by considering Social Exchange Theory, we propose a moderated mediation model wherein HPWSs instigates hospitality employee’s absenteeism behavior through job security (JS), AL act as the supportive construct. A self-administered questionnaire will be designed targeting (N = 350) employees, the study will try to verify the moderated mediation model and proposes the support for recommended hypotheses. 

The paper may conclude just opposite to the relevant literature  that high perceived JS and AL may  serve to encasement of absenteeism .That is  when employees feel very secure, it may also bring along some costs in the form of absenteeism.

Concerning the concrete rules and regulations, unionization and so forth in Norway, the authors in contradict to the existing literature, will  hypothesize and show that high performance work practices (HPWSs) and true leadership will positively related to JS which are expected to increase  absenteeism, but as the dosage is expected to be high so when workers feel extremely secure. Furthermore, the authors hypothesize that the findings are supposed to showcase that JS could mediate the relationship between HPWSs and hospitality employee’s absenteeism behavior. Moreover, the results from the moderated mediation analysis will probably suggest that the mediation of JS is moderated by AL such that with a higher level of AL, the mediation effect of JS becomes stronger and it will causes in higher absenteeism.

Theoretical and managerial implications will be discussed.

 

Keywords: Absenteeism, Authentic Leadership, Job Security, Hospitality, High-Performance Work Systems, Moderated Mediation Model, Norway

 

 

Title: Financial Distress and Government Support During the COVID-19: Evidence from Hotels

Author: Dengjun Zhang

Affiliation: University of Stavanger

 

The COVID-19 pandemic decreases firm revenue and raises the demand for liquidity, resulting in financial distress for all types of firms, especially hotels. Government mandates for safety, such as travel restrictions, cross-border closures, and lockdowns, reduces significantly hotel revenue and increases financial distress. Meanwhile, governments worldwide have initiated various support funds in order to mitigate the negative economic impacts of the pandemic on firms’ liquidity shortage and insolvency risk. Using a multi-wave survey data for 22 Central and Eastern European countries, this study examines hotels’ financial distress during the pandemic and whether government supports have effectively alleviated the pandemic’s negative impact. In the first wave, there are 523 hotels. Of them, 47.8% have delayed payments to their suppliers, landlords, or the tax authorities; 27.1% have been overdue on their obligations to financial institutes. For hotels that received any national or local support, the probability of delaying payment is lower than other hotels; however, the probability of overdue is higher. The second wave shows that 98 hotels exited the market due to bankruptcy or liquidation. The estimation results indicate that hotels that received government supports have a 5.7% lower probability of going bankrupt and the spread of the pandemic, regarding the cases of COVID-19, increases exit risk. We further confirm that government support programs have effectively mitigated the negative impact of COVID-19 on hotel survival.