Mapping Price Competition in short-term rental Tourism Market: A Spatio-Temporal Point Process Mixture Approach

Benchmarking is fundamentally the process of measuring an organization’s performance against that of its peers, often with the goal of identifying best practices to drive improvement. It can be categorized into various types, including internal, competitive, and functional. In the hospitality industry, it is primarily defined as a comparison process where organizations evaluate their services and performance metrics against competitors, or best-in-class organizations to identify areas for improvement. Price benchmarking in the hospitality industry involves evaluating an accommodation’s pricing strategies against its competitors to ensure optimal position within the market, shaping its overall value proposition illustrate how consumers utilize past prices or competitor rates to evaluate current offerings. This phenomenon underscores the importance of benchmarking for the industry to maintain competitive advantage, but underlines the relevance of consistency of data quality to avoid a risk of misalignment. Competitor analysis and identification of suitable benchmarking partners are tedious and complex processes, often leading to organizations being disillusioned with benchmarking programs. Further varying interpretations of pricing strategies and market conditions across destinations complicate the analysis. Motivated by this gap, this study investigates the competitive environment of short-term rental accommodations in Palermo and its surrounding province (with the exclusion of Ustica Island), focusing on booking price as competitive signal. The aim is to detect whether price-setting behaviours exhibit spatio-temporal autocorrelation whether different pricing micro-markets emerge in relation to geographical proximity and seasonal demand differences. In the hospitality industry, price determination encompasses a complex interplay of factors influenced by consumer behaviour, market dynamics, and strategic responses of each organizations. In particular, accommodation prices are influenced by neighborhood attributes, including competition, accessibility, and amenities, which collectively shape the pricing strategies of hotels and short-term rentals. Travellers are willing to pay more for experiences associated with unique cultural and natural heritage. Research indicate that the recognition as a UNESCO World Heritage Site often leads to increased marketing efforts improving accessibility and tourist amenities, further elevating accommodation costs.