Acta turistica, Vol. 36 No. 1, 2024.
Izvorni znanstveni članak
https://doi.org/10.22598/at/2024.36.1.7
EFFECT OF SUBSIDIES ON HEDONIC PRICE MODEL – CASE OF HOTEL ROOM RATES IN CYPRUS DURING COVID-19
Pandelis Mitsis
orcid.org/0000-0003-0136-3447
; Casa College, Nicosia, Cyprus
Sažetak
The hedonic price model has been used to analyse the price of hotel rooms since the beginning of the 1990s and it has subsequently become the standard manner of determining which factors affect room rates the most. However, some forms of government interventions, such as the implementation of travel subsidies, may diminish the degree in which the room rates reflect the implicit prices of hotel characteristics, something that generates concerns regarding applicability of the hedonic pricing model in the presence of subsidies. This article investigates these concerns by estimating hedonic price models using room rates from Cyprus – a nation whose economy is heavily reliant on the sector of travel and tourism – on the implementation of a substantial holiday subsidy scheme. The main findings suggest that the implicit prices of hotel attributes are distorted in the presence of subsidies, thus calling for precaution when the hedonic pricing model is applied as governmental intervention.
The findings also require amendments of the theoretical framework hedonic analysis to incorporate and explain the effect of price subsidies in the implicit prices of the characteristics of the hotels.
Ključne riječi
hedonic pricing model; hotel room rates; domestic travel subsidies; implicit prices; COVID-19; Cyprus
Hrčak ID:
318470
URI
Datum izdavanja:
27.6.2024.
Posjeta: 33 *