Determining guests’ willingness to pay for hotel room attributes with a discrete choice model |
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| Institution: | 1. School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hong Kong;2. Ecole hôtelière de Lausanne, HES-SO/ University of Applied Sciences Western Switzerland, Lausanne, Switzerland;3. College of Charleston Charleston, SC, USA;1. Department of Economics, National Chi Nan University 1 University Road, Puli, Nantou 54561, Taiwan;2. Department of Land Management, Feng Chia University No. 100, Wenhwa Rd, Seatwen, Taichung 40724, Taiwan;3. Department of Management Information System, National Chengchi University No. 64, Sec. 2, Zhinan Rd., Wenshan District, Taipei 11605, Taiwan;1. School of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hong Kong;2. Department of Marketing, Faculty of Economics, University of Alicante, Spain;1. Bournemouth University, Department of Tourism and Hospitality, Fern Barrow, Poole, BH12 5BB Bournemouth, UK;2. IULM University, Department of Economics and Marketing, Carlo Bo 1, 20143 Milan, Italy;3. Eada Business School, Department of Marketing, Aragó 204, 08011 Barcelona, Spain;1. Research Centre, Hotelschool The Hague, Hospitality Business School, Brusselselaan 2, 2587 AH, The Hague, Netherlands;2. Leiden University, Department of Business Studies, Steenschuur 25, 2311 ES, Leiden, Netherlands;3. University of Cambridge, Judge Business School, Trumpington Street, Cambridge, CB2 1AG, UK |
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| Abstract: | Hotel managers need to understand the marginal utility customers associate with a specific attribute of a hotel in order to effectively set up rate fences and to price their rooms accordingly. This study adopted a stated choice experiment and discrete choice modeling method to obtain hotel guests’ willingness to pay (WTP) for a specific set of room attributes within a single hotel property. The attributes include room views, hotel floor, club access, free mini-bar items, smartphone service, and cancellation policy. The study discovered that leisure travelers versus business travelers, and first-time visitors versus repeat visitors, perceive different WTP values for various attributes. These findings provide valuable information for hotel managers to segment their market and conduct revenue management practices in order to maximize revenue and profit. The results also demonstrate the value of discrete choice modeling in obtaining WTP for hotel room attributes. |
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| Keywords: | Discrete choice modeling Stated choice experiment Hotel amenities Willingness to pay Revenue management |
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