Tourist accommodation price setting in Australian strata titled properties

Abstract

Strata title units (dwelling complexes in which individual units are owned by small investors) represent the vast bulk of Australian self-catering tourism units. In many areas, such as Australia's Gold Coast, strata title owned properties have overtaken hotels as the most popular form of tourist accommodation (Warnken, J., Russell, R., Faulkner, B., 2003. Condominium developments in maturing destinations: potentials and problems of long term sustainability. Tourism Management 24, 155-168). Data were collected by interviewing resident unit managers (RUMs) in large strata title complexes in the Gold Coast. Significant findings were as follows: 1. Despite a significant normative literature on accounting-based approaches to setting room rates, there appeared to be a complete absence of accounting-based (e.g., "cost plus") accommodation price setting in the sample investigated. The pricing strategies applied in the sample can be viewed as largely 'intuitive' (Lewis, R.C., Chambers, R.E., 2000. Marketing Leadership in Hospitality, third ed. Wiley, New York) and 'unsophisticated' (Morrison, A.M., 2002. Hospitality and Travel Marketing, third ed. Delmar, Thomson Learning, New York). 2. Strata title complexes could be classified as either subject to a price making, or a price taking, philosophy. 3. The industry was characterised by significant price discounting which appears to be conducted in a largely ad hoc manner. 4. The pricing philosophy applied was contingent upon several key location factors. Additional observations related to room rate decision-making complications arising due to the diversity of stakeholders involved, the limited formal management training undertaken by the RUMs who are charged with the responsibility of setting room rates, and a lack of accountability to owners with respect to pricing issues. The study's significance derives from the paucity of prior research concerned with the strata title owned accommodation sector generally, and more especially the fact that no prior research work concerned with room rate formulation in this fast growing tourism accommodation sector has been found in the literature