characteristics. An increasing number of spa
operators, however, have implemented some
kind of pricing differential for busy times and
slack times, for example, peak and nonpeak
pricing, or weekend and weekday pricing.
Two-for-one specials are another alternative,
as are special prices for local customers and
frequent-customer programs. A good pricing
strategy can help a spa operator increase
RevPATH. We discuss potential spa rate
fences in a moment, but first we must address
the issue of perceived pricing fairness.
Although it is possible to charge a higher
price solely based on high demand (considered
to be a surcharge), customers may
resent being charged different prices for
essentially the same treatment, unless they
perceive a “fair” reason for the price differential
(Kahneman, Knetsch, and Thaler
1986; Kimes and Wirtz 2003). Setting a
“full” price during high times and then offering
discounts during slack or other unfavorable
times is viewed as more fair than
levying surcharges in the face of strong
demand. This may be the reason that revenue
management is thought of as a discounting
strategy. In determining who pays which