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Ekonomika preduzeća
2019, vol. 67, iss. 3-4, pp. 273-281
article language: English
document type: Original Scientific Paper
published on: 08/07/2019
doi: 10.5937/EKOPRE1904273B
Dynamic pricing: Theory or a reality for emerging markets case study of Serbia
University Singidunum, Faculty of Tourism and Hospitality Management, Belgrade

Abstract

Revenue management (RM) is a technique used in hospitality for over 3 decades. North American corporate hotel chains have started to implement RM principles already in the early '80s of the last century [13]. The basic principles of RM are dynamic pricing in which demand forecasting is having a major role. Today, almost 40 years after the introduction of RM, specific markets still have not implemented successfully the RM principles in their daily operations nor on a strategic level. In this paper, the research was conducted looking at the pricing strategy of Serbian hotels from 2013 to the end of 2017. The Serbian market is a rapidly growing tourism market as it records higher growth rates than the European and global average. However, Serbia is still an emerging market concerning the overall level of tourism development. Results of the research show that Serbian hotel managers manage their rates monthly, while RM on a weekly or a daily basis is used very little. Besides time management in pricing strategy, the research shows that the price is dominantly influenced by room supply, which is, as it was shown in the research, very static in comparison to demand. Simply said, hotels in Serbia pay more attention to the room supply rather than room demand. Furthermore, results from the research reveal that the market is witnessing a strong decrease in average daily rate (ADR). However, the drop in ADR is still leading to an overall increase in total revenue. Yet, tourism demand demonstrated significant intervals of price in elasticity where potential revenue was lost due to inadequate pricing policy. Therefore, we argue that the wider application of RM principles is necessary in order to maximize favourable trends of arrivals and overnights that Serbia has been recording in the last 10 years.

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References

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