This paper develops a Nash bargaining model to study the average daily rate per rented hotel room. It then examines the model with data from international tourist hotels in Taipei, Taiwan. The empirical results indicate that: (1) an increase in the percentage of rented rooms taken by independent travellers (the independent traveller ratio) could significantly raise the average daily rate; (2) the average daily rate paid by independent travellers is significantly higher than that paid by group travellers; and (3) any improvement of hotel operators' relative bargaining power in relation to independent or group travellers will significantly raise hotels' average daily rates.
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