Rethinking hotel pricing: the role of service duration in consumer price perceptions

Purpose This study aims to examine how service duration impacts hotel guests’ price perceptions. It challenges the traditional fixed-rate hotel pricing model in light of increasingly flexible travel behaviors. Design/methodology/approach Through a novel typology of service duration − distinguishing between time-as-input and time-as-product services − this research conceptualizes hotel stays as bounded time-based offerings. Three studies (a pretest and two experiments) investigate the effect of partial service duration on price perceptions and test two moderating factors: early check-in fee waivers and purpose of stay (leisure versus business). Findings Across all studies, partial service duration led to significantly lower perceptions of price fairness, satisfaction and value. However, when early check-in fees were waived, the negative effect of shortened duration diminished. Additionally, leisure travelers were more adversely affected by reduced service duration than business travelers. Practical implications Findings demonstrate the growing need for flexible and customer-centric pricing models in the hotel industry. Strategic use of fee waivers, flexible access and segment-specific policies can provide hotel companies a competitive edge while enhancing price perceptions. Originality This study introduces a new service typology and a duration-centric framework for evaluating price perceptions. By identifying service duration as a critical factor affecting price fairness and value, this study challenges traditional, inflexible hotel pricing practices and highlights the significant impact of service duration on consumer perceptions of price fairness.