Does advance booking matter in hedonic pricing? A new multivariate approach

We consider prices across the advance bookings as a multivariate variable, modelling the time effect by means of a structural vector autoregression. Its unit‐specific fixed effect is taken as the dependent variable in a set of hedonic regressions allowing us to estimate the marginal contribution to price of the (time‐invariant) attributes along the price trajectory. Results from our two‐step approach indicate that although past occupancy rates, events, bank holidays, and seasonality differentiate pricing strategies across advance bookings, time‐invariant services/attributes tend to increase in hedonic value as the advance booking period decreases, reducing the contribution of dynamic pricing.