Understanding consumers' willingness to pay for online upselling of hotel rooms through the lens of psychological distance

Willingness to pay (WTP) is vital to every pricing decision. However, its accurate measurement remains challenging to businesses because consumers do not easily disclose it. Even when consumers reveal their WTP, businesses do not understand its determinants. This study uses the construal level theory and psychological distance to analyse five-year market data from an online bidding system, spanning 2018 to 2022, to understand consumers' WTP for hotel room upselling and the influence of COVID-19 on psychological distance's effects. The findings revealed that all four dimensions of psychological distance – temporal, spatial, hypothetical and social – positively related to WTP for online upselling. However, it was only the effect of the temporal distance dimension that COVID-19 negatively influenced. The results offer practical guidelines for effective revenue management pricing regarding promoting upselling to the right customers and a theoretical understanding of the relationship between construal level and WTP.