Unveiling customer choice with salience theory: The link between room price and breakfast demand
Year: 2024
Type: article
Abstract: Salience theory posits that decision-makers pay more attention to the most outstanding—salient—attributes of available options, ultimately impacting decision-makers’ choices. This study proposes extending this theory to the decision of adding an extra component to a product, with special significance for the hospitality industry. Hotels tend to charge a fixed amount to add breakfast to a reservation. Drawing on the salience theory, we show that this constant surcharge makes the demand for breakfast-included rooms dependent on the room’s price. The empirical application conducted on a sample of over 22,000 reservations supports the predictions that the probability of selling breakfast-included rooms rises (1) after a room price increase and (2) less so if consumers do not anticipate the price hike. Beyond the critical theoretical extension, this paper brings relevant managerial implications for dynamic pricing strategies for breakfast, which, in turn, may become a game changer for hotel revenue management strategies. • This paper applies salience theory of consumer choice in a travel-related context. • Charging hotel breakfasts at a fixed price makes its demand dependent on room price. • It uses reservation-level data for a hotel charging a fixed price for breakfast. • The probability of selling breakfast-included rooms rises with room price increases. • This probability increases less if consumers do not anticipate the price hike.
Authors: Oriol Anguera-Torrell, Juan Luis Nicolau
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,980
OpenAlex ID: W4403565767