ASSESSMENT OF PRICE DISCRIMINATION IN SELECTED HOTELS IN LAGOS, NIGERIA

Abstract

Price discrimination has deep roots in the economics discipline, where it has long been recognized that it can be for the good or for the bad and sometimes even necessary for both the firm and customers. However, the lack of attention by regulators on the discriminatory effects pricing on the industry appeared even more clearly on the rise, because it hinders competition though beneficial for the consumers. The study examines price discrimination within the hotel industry in selected hotels in Ikeja, Ifako-ijaye and Alimosho local government areas, of Lagos state, Nigeria. 300 samples were selected from the about 663 hotels within the three local governments using quota, purposive and convenience sampling techniques. 300 questionnaires were initially administered with the support of six field assistants, however only 288 questionnaires were completed and returned after the second rounds of questionnaires were administered to validate the quality of the data. The data were analyzed using statistical package for social sciences. Result revealed that location, size/class of the hotels and intention to induce patronage are the main reasons for price discrimination among hotels. The study concludes that there exits selective price cuts strategies, whereby hotels cut its prices selectively, but not below costs, to customers that might switch to a competitor. We recommend investment in credible risk assessment valuation and service segmentation to maximize the benefits and reduce the adverse effects of price discrimination on both the hotel and guests.