Myth of early booking gains

Abstract

This paper investigates the relationship between booking lead time and hotel room rates while controlling for various booking, room and hotel characteristics. Data are based on big data drawn from a hotel reservation database covering about 123,000 bookings over a 5-year period. Quantile estimations for online bookings show that early bookings are associated with the highest room rates, while late bookings have the lowest ones. For lower priced rooms of leisure guests booked offline, there is a U-shaped relationship with the lowest prices booked between 10 and 24\xa0days before the check-in day. Similarly for business guests, a U-shaped pattern can be found for high-priced bookings. Overall, price variations between bookings at different points in time range between 10% for external online bookings and up to 28% for offline bookings of leisure guests. The results for hotel bookings stand in contrast to empirical evidence for airfares and train tickets.