The hotel industry is often suffering from price wars, which have a number of reasons such as financial crises. Resulting from these reasons are going to reduce prices. The continued price reductions among hotels, resulting in price wars. So, this paper searches for developing and empirically testing a framework to examine which factors causes the price wars and the consequences of them. Using SEM to examine the data collected from a sample of 113 hotels, the results indicate supply, financial crises, pricing objectives based on discounts, and price sensitivity have a significant positive impact on price wars’ eruption. Price wars have a significant negative influence significantly on hotel profitability, hotel image, competitive position, brand loyalty. On the other hand, price wars may lead to exit from market. The results offer important implications for hoteliers and are likely to stimulate further research in the area of pricing.
