Pricing of the tourism product: a tool for entrepreneurs to adapt to a flexible market

The paper approaches the hedonic pricing analysis as a useful instrument for tourism entrepreneurs to get a competitive advantage through price setting policies. The main goal of this research is to conduct an analysis useful to measure the marginal effect of the attributes which contributes to price setting; the empirical analysis is developed on the prices of accommodation establishments from Romania. The study focuses on small and medium sized accommodation units, most of them entirely privately-owned. Within the analysis we set attributes from inside and outside the accommodation establishment as long as they are both ultimately linked with the pricing policy. Several hedonic specifi cations are estimated, in order to investigate the signifi cance of accommodation attributes in the formation of room rates. There is a set of attributes with signifi cant effect on the room price in all models, but with different intensity. The managers have to pay more attention to their internal facilities, goods or amenities (as recreational facilities), and to be committed to increasing the quality of their service delivery process, but there is also an opportunity for higher prices supported by attractive neighbourhoods. These fi ndings are useful for the entrepreneurs interested in developing new businesses in tourism but also for managers already performing in the sector. Both categories have to face challenges such as new services development, price setting policy, choosing new locations. A fl exible pricing strategy could become an effective and effi cient tool for accommodation units in order to increase their performance. These elements are potential competitive dimensions and provide good opportunities for adapting to a dynamic market. Public and local administration organizations can develop appropriate policies for regional development based on hedonic models and thus, generate revenues and create opportunities for a sustainable development of tourism and also of the geographical region.