Free add-on services and perceived value in competitive environments: Evidence from online hotel reviews |
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| Institution: | 1. School of Management, Xi’an Jiaotong University, Xi’an, 710049, China;2. Economics and Management School, Wuhan University, Wuhan, 430072, China;3. Coles College of Business, Kennasaw State University, Kennasaw, GA, USA;4. EMLYON Business School, Ecully Cedex, 69134, France;1. Department of Tourism, Leisure and Hospitality Management, National Chi Nan University, No. 1, University Road, Puli, Nantou, 54561, Taiwan;2. Department of Culinary Arts and Hotel Management, HungKuang University, No. 1018, Sec. 6, Taiwan Boulevard, Shalu District, Taichung City, 43302, Taiwan;3. Department of Management and Marketing, Faculty of Business, The Hong Kong Polytechnic University, No. 11, Yuk Choi Road, Hung Hom, Kowloon, Hong Kong Special Administrative Region;4. Rosen College of Hospitality Management, University of Central Florida, 9907 Universal Boulevard, Orlando, Florida, 32819-9357, USA;1. Key Laboratory of Brain, Cognition and Education Sciences (South China Normal University), Ministry of Education, China;2. School of Tourism Management, South China Normal University, Guangzhou, China;3. School of Psychology, South China Normal University, Guangzhou, China;4. Foodservice and Lodging Department, Rosen College of Hospitality Management, University of Central Florida, Orlando, USA |
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| Abstract: | This study investigates how free add-on services affect customers’ perceived value in horizontal and vertical competition. We collected 349,879 reviews about over 3000 hotels in 25 U.S. cities from TripAdvisor. Using three balanced data sets generated by coarsened exact matching, the ordered logistic regressions show that free hotel add-on services (including free breakfast, parking, and WiFi) positively affect consumers’ perceived value. However, increased horizontal and vertical competition differentially weakens the positive effects of free add-on services. We not only observe a negative moderating effect of horizontal competition, but also identify three patterns of the marginal effects of these three add-ons in horizontal competition. The moderating effect of vertical competition exists from the higher-grade hotel segment to a lower-grade hotel, but such an effect is insignificant from the lower-grade hotel segment to a higher-grade hotel. Therefore, hotel managers should consider diverse external competitive environments and design appropriate differentiated service strategies. |
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| Keywords: | Hotel free add-ons Perceived value Online review Horizontal competition Vertical competition |
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