The Effects of Internal and External Reference Prices on Travelers’ Price Evaluations

Choongbeom Choi, Anna S. Mattila

Research output: Contribution to journalArticlepeer-review

20 Scopus citations

Abstract

The relative use of an internal reference price (IRP) versus an external reference price (ERP) becomes an important issue in the travel and lodging contexts as the increased promotional activity by destinations and hotels is likely to be based on price-comparison advertisements. However, there is little guidance on how tourism and hospitality organizations can use pricing structure to influence reference price, which is cardinal to travelers’ evaluation of price acceptability. Thus, the current research examines how pricing characteristics of the lodging services shift travelers’ sensitivity to two different types of reference prices, and therefore, influence their price evaluations. Compared with IRP, our findings indicate that individuals are more sensitive to and affected by ERP. The results also demonstrate that information accessibility and perceived diagnosticity are key mechanisms that lead to the differential effect of IRP versus ERP on travelers’ price evaluations. Relevant managerial implications are drawn regarding price and promotion strategies.

Original languageEnglish (US)
Pages (from-to)1068-1077
Number of pages10
JournalJournal of Travel Research
Volume57
Issue number8
DOIs
StatePublished - Nov 1 2018

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Transportation
  • Tourism, Leisure and Hospitality Management

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