To Bundle Or Not To Bundle: Luxury Villa Pricing Strategies That Attract Customers

Abstract

In this research, the main focus is on the pricing strategies of luxury villas in Montenegro, specifically in southern part of Montenegro. The research conducted was twofold. The first part of the research was content analysis, a specifical analysis of current offers, and pricing for villas in three Montenegrin cities Tivat, Kotor, and Herceg Novi. The second part of the research was a survey administered to potential guests of a hypothetical property, a luxury villa, investigating guest preferences in villa pricing strategies. Prices were set utilizing the insights from the noted market analysis. Results suggest that guests prefer bundled offers, where they would pay a fixed price of a villa per night, and an additional mandatory villa per, per person. The market research also revealed the need for revenue management in Montenegro, since many villa owners did not differentiate prices throughout the year. Revenue management is something that is implemented in many industries nowadays and it has a great impact on revenue streams. Airlines and hotels are just pioneers of revenue management implementation. However, a la carte pricing in private accommodation is not researched or investigated in depth