The effect of price on word of mouth: First time versus heavy repeat visitors

Many tourist destinations strongly focus and depend on repeat visitors. A central assumption thereby is that repeat visitors are more profitable (e.g. through lower marketing costs) and that their positive word of mouth (WOM) is essential to attract new guests. In this paper, we present a large-scale empirical study to investigate the effect of price for first time and heavy repeat visitors of ski resorts. Applying a hierarchical linear modelling approach, we show that price is negatively related to WOM for first time visitors and that price has no effect on WOM for repeat visitors. Thus, we show that the effect of price on WOM decreases for repeat visitors.