Differentiation and pricing strategies for hotels in sun and beach destinations

This paper develops a theoretical model for oligopolistic competition in the hotel industry for sun and beach destinations. The aim of the model is to identify in which cases the market structure is biased towards luxury hotels with high-quality investment levels or towards medium and low-quality hotels with cheaper prices. The willingness to pay and the number of customers in each income-level segment and hotels' location are the most relevant factors in understanding the market structure. These determinants of market structure are relevant not only for market participants but also for policymakers with responsibilities in designing tourism policies.

Automated summary

This paper develops a theoretical model for oligopolistic competition in the hotel industry for sun and beach destinations, aiming to identify whether the market structure leans towards luxury hotels with high-quality investments or medium and low-quality hotels with cheaper prices. The willingness to pay by consumers, the number of customers in different income segments, and the location of hotels are key factors in determining the market structure. These determinants are important for both market participants and policymakers involved in designing tourism policies.