Booking your holiday can be stressful, especially when you want to make sure that you are getting a good quality hotel as well as value for your money. So you may think that looking on comparison websites are a quick and easy way to compare potential hotels.
However, looking will quickly turn into booking when the website is swarming with limited offers for ‘Today only!’ Not to mention constant updates about how many other people are looking at the same hotel that you’re interested in, which only has a few rooms left. When rooms seem to be selling by the second, customers can easily be influenced into booking a hotel because it only has 3 bedrooms left. Not to mention the fact that if you book now you can save £50, whilst also experiencing the satisfaction of beating 4 strangers to the finish line.
Travel comparison websites, such as booking.com, promote the idea that ‘if everyone’s buying it, it must be good’, by making the number of rooms they have seems scarce. They employ strategies focusing on limited availability due to high demand (e.g. ‘only 3 rooms left’) and limited supply (e.g. whilst stocks last).
Gierl and Huettl (2010) investigated the effects of scarcity due to demand (e.g. nearly sold out) versus scarcity due to supply (i.e. Limited edition). They found that the two forms had different effects depending on what the customer wanted from the product. If it was desired to increase a person’s social status or display their uniqueness, then it was more likely that scarcity due to supply was more attractive to them.
In contrast if the product is low in stock due to high demand, it is more attractive to consumers as this infers that everyone is purchasing it because of its high quality. The graph below displays the effectiveness of this technique since the attractiveness of a product increases along with its scarcity (Gierl & Huettl, 2010). Travel companies maximise on this method by stating that they have a limited number of rooms left, causing the hotel to appear more attractive to you and as a result you are more likely to book it.
Not only does scarcity indicate high quality, it also leads you to believe that the product must be valuable. Mittone and Savadori (2009) had participants choose between scarce and abundant items, and then asked at what price they would be willing to sell the scarce item (willingness to accept, WTA). They found that participants who chose the scarce product would return it for a higher price than those who chose a product that was in abundance. This shows that more value had been placed on the product due to the fact it was scarce.
Alongside this, those who chose the scarce product had a selling price (WTA) equal to that of the abundant product, even though it had been previously marked at a lower market price. The WTA scores on the figure below show that the scarce object is considered just as valuable as the abundant one, even though it is actually worth less. This indicates that when an item is deemed scarce the perceived value of it increases. Comparison websites can take advantage of this simply by stating that there are fewer rooms' available, leading consumers to believe that it must be of higher value.
This should be considered a warning to all shoppers who may be fooled into thinking that Hotel Room A is of higher value than Room B, simply because it only has 2 rooms left.
Gierl, H., & Huettl, V. (2010). Are scarce products always more attractive? The interaction of different types of scarcity signals with products' suitability for conspicuous consumption. International Journal of Research in Marketing, 27(3), 225-235.
Mittone, L., & Savadori, L. (2009). The scarcity bias. Applied Psychology,58(3), 453-468.