Hedonic Hotel Pricing and Quality Signals: Which are the Market Value Drivers in a Transition Phase?

The study aims to uncover the relationships between price setting and reputation building processes through an application of hedonic price function. In coherence with a sustainable approach, the model proposed also includes variables related to land use policies and tourism development strategies. A simultaneous equations model is adopted where both price and quality signals are endogenously determined. This innovative method is appropriate in an emerging urban destination, characterized by an enhancement of the existing hotel industry. The findings reveal that, in accordance with a customer based perspective, a high star category and place uniqueness help explain consumers’ willingness to pay. A premium price is recognized for quality signals directed at balancing intangible aspects related to service provision with hoteliers’ environmental concerns. The results have important marketing implications for the competitiveness of the hospitality industry.