Determining guests’ willingness to pay for hotel room attributes with a discrete choice model

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.     

The effects of cognitive,affective, and sensory attributes on hotel choice

Over the past decade, experiential marketing has been the focus of many hospitality and tourism studies. Yet the existing literature does not provide experimental evidence of the incremental effects of affective and sensory attributes on the choice of hospitality service and destinations. This study attempts to provide some such evidence by using discrete choice modeling to examine the differential effects of cognitive, affective, sensory attributes on hotel choice. Bayesian D-optimal design based on JMP 8.0 was used to create a discrete choice experiment. Consumer hotel choice was predicted using random parameter logit (RPL) models. These results demonstrate that when customers choose a hotel, they consider not only cognitive attributes (e.g., price, service and food quality, and national brand), but also affective (e.g., comfortable feeling and entertaining) and sensory (e.g., room quality, overall atmosphere) attributes. The results also demonstrate the incremental value of adding affective and sensory attributes to a choice model when compared to a model using only traditional cognitive attributes. The data suggest that hotel managers can effectively differentiate their properties by incorporating affective and sensory attributes in their promotions. Moreover, the findings provide hotel managers with important insights into new product development and marketing communications strategy.     

The power of expert identity: How website-recognized expert reviews influence travelers' online rating behavior

The objective of this paper is to study the effects of online user-generated “expert reviews” on travelers' behavior. After controlling for a large set of independent variables, the results show that as the number of expert reviews for a hotel increases, future traveler ratings for the hotel increase. However, the marginal effect of a greater number of expert reviews decreases. Further, as the reviewing expertise level of a traveler increases, the traveler posts more negative ratings, but the marginal effect of the level of reviewing expertise decreases. Our results also indicate that reviewing expertise can reinforce the positive effect of expert hotel reviews on travelers' rating behavior. The robustness of our results is confirmed by a Bayesian ordered logit model. Finally, the implications of the results are discussed in terms of research and practice.     

Predicting Hotel Choice Decisions and Segmenting Hotel Consumers: A Comparative Assessment of a Recent Consumer Based Approach

Abstract

Given the intensified competition to attract today's increasingly discerning hotel guests, it is vital for hotel managers to understand the set or bundle of hotel attributes which are demanded by the potential traveler. Unfortunately, marketing research in hotels is still mainly confined to the analysis of guest-related data collected during registration or from guest comment cards. These data, however, have little merit as predictors of customer behaviour and cannot answer the “what if” questions. In recent and past research in hospitality and tourism, researchers have demonstrated the use of product attributes in predicting consumer preferences and segmenting markets (Bell and Morey 1997; Kim 1996). In undertaking this approach to behavioral study, many researchers in the field have been attracted to use conjoint attribute part-worths, (the judgmentally quantified attribute valuesderived from conjoint modeling. This study attempts to utilize the compositional self-explication model as a reference model to assess the comparative superiority of the conjoint model in predicting client preferences among travelers to Hong Kong. It also seeks to reveal subgroup preference variations by using two segmentation approaches. The overall finding indicated that the most important hotel attribute sought by all respondents is Room Rate, followed by Star Rating, Location, Brand and Room Type. In terms of market segments, the results revealed similar preference profiles among leisure, short-haul and infrequent travelers as one group and business, long-haul and frequent travelers as another.     

Effects of brand personality dimensions on consumers’ perceived self-image congruity and functional congruity with hotel brands

Brand personality plays a key role in consumer brand psychology, but researchers and practitioners lack an adequate understanding of the efficacy of individual brand personality dimensions. Drawing on the theory of self-congruity and an analysis of eight U.S. hotel brands, this study revealed the varying roles that brand personality plays in driving brand choice: in particular, consumers tend to express their self-images through the brand personality dimensions known as Excitement and Sincerity, while relying on Sincerity and Competence to evaluate how consistent a hotel's functions are with their own preferences. The study also indicates that business travelers are more likely than leisure travelers to value functional congruity, while self-image congruity is more important to leisure than business travelers. The paper offers hotel practitioners a better understanding of the personality dimensions they should position or strengthen for their hotel brands to deliver to customers based on each dimension's utility.     

The choice between business travel and video conferencing after COVID-19 – Insights from a choice experiment among frequent travelers

COVID-19 has accelerated the substitution of videoconferencing for business travel. However, little research exists about the decision-making behavior of business travelers considering virtual alternatives. We fill this gap by reconceptualizing the decision-making process and investigating the fundamental choice between face-to-face (FtF) and virtual communication (VC) using an adaptive choice-based conjoint analysis. We argue that the process of decision making of business travelers is distinct to that of leisure travelers, as the fundamental decision between FtF and VC occurs prior to subsequent travel decisions. We show that the purpose of the meeting, the character of the message, and the location of the meeting are the decision attributes of greatest importance. Using a novel methodology we present a holistic decision model that increases the theoretical understanding of business traveler decision-making and provide practitioners with comprehensive insights relevant to travel policy development, and executives in the business travel market with guidance with management decisions.     

Online Shopping of Travel Products: A Study of Influence of Each Dimension of travelers' Attitudes and the Impact of travelers' Online Shopping Experiences on Their Purchase Intentions

This study examines the impact of three attributes (perception of convenience, perception of merchandise options, and perception of value) on travelers' attitudes toward different online agencies online shopping for travel products and the impact of online shopping experiences on their online purchase intentions. The collected data arises from an Internet survey of registered members of an online travel service company that caters to leisure travelers. The study finds that perceptions of convenience and value are two valid dimensions that measure travelers' attitudes. Findings also confirm that those two attitudes' attributes and travelers' online shopping experiences exert significant influence on their online purchase intentions. Travelers have a more positive attitude toward travel portal websites than toward companies' branded websites in terms of perception of convenience, perception of merchandise options, and perception of value.     

Off-season tourists and the cultural offer of a mass-tourism destination: The case of Rimini

This paper assesses the potential implications on off-season tourism of enhancing the cultural offer of Rimini, a popular Italian seaside holiday destination hosting about 12 million overnight stays per year. Since more than 9 million of these stays are concentrated in the summer season, in the last 20 years. Rimini has been undergoing a policy of seasonality smoothing, which mainly pivots around business and cultural tourism. This assessment has been carried out through discrete choice experiments submitted to a sample of about 800 tourists who visited Rimini outside the summer months. Since tourism can be viewed as a composite good, which overall utility depends on how the component characteristics are arranged, the choice experiments allow to disentangle the importance and the willingness to pay of tourists for different attributes of the holiday. The choice model incorporates a number of possible changes to actual tourism features (which are also the subject of public debate), including them in hypothetical alternative “holiday packages”. The conditional logit analysis of the choice experiments can highlight any synergy or trade-off between cultural and business tourism. Results suggest that business and leisure tourists share many features related to the use of the territory, while there are important trade-offs between these two groups and cultural tourists. Since business tourists have a higher willingness to extend their stay, a softer budget, and their demand is also complementary to the demand of summer tourists (Brau, Scorcu, & Vici, 2009), from the destination point of view investing in this market segment would be the best option. Although a “second best”, however, cultural tourists share with the local population of Rimini many aspects of the demand of territory (Figini, Castellani, & Vici, 2009). Hence, cultural tourism can play a fundamental role in the intermediate season as a tool for smoothing seasonality, to diversify investments and to give value to the city’s cultural heritage.     

Preferences and Willingness to Pay for Green Hotel Attributes in Tourist Choice Behavior: The Case of Taiwan

Although many companies in the hotel industry aim to pursue more sustainable and socially responsible practices, the present literature shows mixed results with regard to tourist reactions to such moves, especially for the service quality perception impacted by implemented green practices and the willingness to pay more for such actions. Unlike previous research examining tourists’ preferences for separate green hotel attributes, this study identifies the determinants of tourists’ choice of green hotel attributes. Additionally, the study measures the willingness to pay (WTP) for such services, in the context of the Taiwanese market, using the stated preference of combined green hotel attribute scenarios. A multinomial logit (MNL) model is employed to estimate the relative influence of behavioral and facility attributes on choice behavior. Furthermore, the study examines determinants influencing respondents’ choice of green hotel attributes. A latent variable class model (LVCM) approach is applied in the estimation of the unobserved heterogeneity, and a total of 390 valid respondents were used in the analysis. The empirical MNL results indicate that while tourists prefer luxury rooms and the provision of personal toiletries, they are also willing to accept reduced service quality. Additionally, sex, income, and age have significant influences on tourist choice behavior. The results of the LVCM model demonstrate that respondents with high levels of the green consumption trait are more likely to choose hotels that have a greater number of environmentally friendly attributes. The implicit amount that tourists are willing to pay for room quality is around US$13, for the provision of personal toiletries is about US$22, and for service quality is US$12, but they also require a discount of approximately US$11 in order to accept the common practices of green hotels. This study is useful in providing the hotel industry and government with quantitative information that can be used to develop and implement better green hotel policies.     

The Importance of Hotel Attributes in Contributing to Travelers' Satisfaction in the Hong Kong Hotel Industry

Abstract

This study surveyed 402 international travelers to explore their satisfaction levels towards service and facility quality in three Hong Kong hotel market segments, High-Tariff A, High-Tariff B and Medium Tariff. Six perception dimensions were extracted from 33 hotel attributes by a factor analysis. All six dimensions had a significant impact on the overall satisfaction of travelers with service quality and facilities in the three Hong Kong hotel market segments. Quality of Staff Performance was the most influential factor followed by Quality of Room Facilities, Value for Money, Variety and Efficient Services, Business Related Services, and Safety and Security respectively. It was found that travelers had the lowest satisfaction level towards the Medium-Tariff hotel segment. By identifying the most influential hotel dimension in influencing travelers' satisfaction levels, hoteliers will be in an advantageous position to formulate tactics to meet the changing needs and expectations of travelers. Implementing human resources training that emphasizes the fact that service quality is part of each employee's job should have a significant impact on guest re-purchase intention. The importance of value segmentation cannot be overlooked by hoteliers. Travelers will continue to expect hotels to provide more value-for-money services and facilities and they are expected to shift their purchasing decision to an economic value basis.     

Tourist preferences for rural house stays: Evidence from discrete choice modelling in Spain

Although the appeal of rural houses for tourists lies mainly in the natural surroundings and their intrinsic rural characteristics, there are other factors which are also important such as their size, type of building, quality of equipment, services and activities offered. To evaluate the tourists' preferences for these potential or effective attributes, a stated preference experiment was conducted in the Northwest area of the Region of Murcia and the data are analysed using discrete choice modelling methodology. Consistent specifications for multinomial logit and mixed logit models that consider variations in tastes within tourists' preferences are found. The results could be of use to promoters and owners of rural houses when planning marketing and promotional campaigns or when taking effective investment decisions.     

Information search behavior of Hong Kong's inbound travelers‐a comparison of business and leisure travelers

Abstract

The purpose of this study is to examine the information search behavior of Hong Kong's inbound tourists, in particular business and leisure travelers. The study clearly shows that business and leisure travelers demonstrate different information search behavior. ‘Personal experience,’ ‘Travel agency/tour company,’ ‘Airlines’ and the ‘Internet’ are most frequently relied upon by business travelers in searching for travel information, while leisure travelers prefer ‘Travel agency/tour company,’ ‘Friends or relatives,’ ‘Travel guide books,’ and ‘Personal experience.’ The study also reveals that the total number of information sources used and the length of pre‐trip planning lead‐time are significantly different between these two groups of travelers. First time travelers also have a longer pre‐trip planning lead‐time than repeat travelers. Furthermore, business and leisure travelers perceive the levels of influence of several information sources, including ‘Corporate travel departments,’ ‘Friends or relatives,’ ‘Travel guide books,’ and the ‘Internet,’ differently. These information sources were classified into five different dimensions, including ‘Media,’ ‘Neutral,’ ‘Retail,’ ‘Interpersonal,’ and ‘Personal experience.’ Analysis based on travelers' purpose for traveling and demographic information was performed. Leisure travelers perceive the level of influence of ‘Neutral’ sources as significantly higher, and those with lower household incomes perceived the level of influence of ‘Personal experience’ as lower. The results of this study will allow marketers in Hong Kong to better understand travelers’ information search behavior so that they can more effectively tailor their marketing strategies to these two major markets.     

IDENTIFYING LEISURE TRAVEL MARKET SEGMENTS BASED ON PREFERENCE FOR NOVELTY

The motivation and knowledge of travelers affects their choice of destination and selection of activities while on vacation. Understanding motivation is important for all stakeholders in the tourism industry. The search for novelty is one motivating factor when planning leisure trips and vacation activities. A foreign destination offers a form of novelty to the traveler because it can provide experiences that are not of the everyday variety. The chosen location may have specific geographical features, a different cultural background, special shopping opportunities, a different language, new foods, and unique leisure activities that can provide a novel experience. The purpose of this study is to identify segments of potential U.S. leisure travelers based on their level of novelty seeking and to investigate the relationship between travelers' levels of novelty seeking and their knowledge of a destination and preferred travel style.     

Stated preference and choice models applied to recreation research: A review

Abstract

This article discusses the use and usefulness of stated preference and choice models in recreation/leisure research. Stated preference and choice models require one to design decision experiments to study recreational and leisure decisions made in hypothetical or simulated markets. Historically, such experiments were uncommon in recreation and leisure research; therefore we pay particular attention to comparisons of the stated preference modeling approaches with modeling approaches based on observations of choices made in real markets, such as the analysis of discrete choices using conditional and nested multinomial logit models. The conceptual and theoretical bases of stated preference and choice models are discussed; and procedures for developing such models, including different design strategies, are outlined. Potential uses of these models in recreation research are illustrated with reference to several recent empirical applications.     

What services do Muslim tourists want? Uncovering nonlinear relationships and unobserved heterogeneity

Halal tourism is a dynamic emerging market segment that is growing at a notable pace. Understanding the Muslim travelers' needs, interests and behaviors is a key priority for professionals. Therefore, the goals of this study are twofold: first, to examine the linear and nonlinear effects of Islamic physical and nonphysical hotel attributes on Muslim guests' visit intention and willingness to pay extra, and second, to employ an advanced segmentation method for revealing different types of Muslim travelers. Data were randomly collected from 559 Muslim in the United Arab Emirates. The study adopted the finite mixtures partial least squares technique to investigate the question of unobserved heterogeneity among Muslim travelers. The study results reveal important linear and nonlinear relationships and three new Muslim segments. The segment-specific findings offer distinctive insights for managers, policy makers and decision makers in developing long-term strategies for tapping into the Muslim travel market.     

Hong Kong Residents' Adoption of Risk Reduction Strategies in Leisure Travel

For decades risk has been identified as a major concern for traveling. Although some recent studies focused on studying consumers' perceived travel risks, only a few prior studies literally discussed consumers' risk reduction strategies in the context of travel-related services. To fill this gap, this study aims to investigate the travel-related risk reduction strategies that Hong Kong residents adopt to strengthen their confidence during leisure travel. This study also explores if travelers of different travel-related and sociodemographic characteristics adopt different risk reduction strategies. Among different risk reduction strategies—“purchase travel insurance,” “bring extra cash,” and “search for latest information about the destination”—are the ones which Hong Kong residents are likely to adopt when they travel for leisure. Results revealed that travel-related and sociodemographic characteristics influenced travelers' likelihood to risk reduction strategies differently. Specifically, travel experience of travelers, age, and household income displayed significant differences in the likelihood of adopting most of the risk reduction strategies.     

Can peer-to-peer accommodations act as lodging a stepping-stone for mega-events?

As cities bid for large-scale conventions, they are frequently thwarted by not having sufficient lodging capacity. At the same time, adding new hotels can have negative long-term effects on the city's lodging industry. Drawing on choice theory, this study postulates that one viable solution may be peer-to-peer accommodations, especially during the recovery stage of the post-COVID-19 environment. In this work, researchers conducted a two-part survey of 1212 participants. Results indicate that there were both business and leisure participants whose first choice was a P2P accommodation (20% business: 35% leisure). Between hotel and P2P accommodation travelers, though, there was a significant difference. For those who indicated that a peer-to-peer accommodation was their first choice, location, number of reviews, and star rating were ranked as the most important aspects of an accommodation. The relative importance of the variables differed by type of accommodation (e.g., shared room, etc.).     

The Senior Travel Market

Abstract

Demographically, the senior market segment is the fastest growing travel segment in the United States. While existing as one of the most influential groups of leisure travelers, they are often forgotten in the world of hotel marketing, advertising, and overall design of the hotel itself. This study examined the “Do's & Don'ts” of the senior market, as well as the importance seniors hold on service attributes, hotel layout, and building design. Findings are derived from literature reviews and observations. In addition, personal interviews were conducted to compare what hotel employees thought was an important need to the seniors in contrast to what the senior travelers thought was. Recommendations were made to assist hotel companies in attracting the senior market ranging from lifestyle advertising to building guestrooms with particular amenities.     

An analysis of customer room choice model and revenue management practices in the hotel industry

Considering the limitations of existing studies on the customer choice behaviour, this paper tries to use the variable precision rough set (VPRS) approach to establish a customer room choice model (CRCM) based on the logit model, which satisfies the required precision. This model could analyze the data set of customer room choice and directly identify real attributes, which affect customer room choice and the weights of these attributes without prior information; and then the probability of the customer room choice can be conducted by the CRCM. In terms of the results, hotels can predict customer demand of each rate class and improve their precision, in order to increase hotel revenue.     

Segmenting Leisure Travelers by Risk Reduction Strategies

This study is an initial attempt in using risk reduction strategies as the basis for segmenting leisure travelers. Results of the study generated insights into the nature of consumer markets and created three segments of travelers who adopted risk reduction strategies in different ways. The three leisure travelers' segments include: socially reliant risk reducers, self-initiated risk reducers, and unconcerned about risk reduction. Travel behaviors and sociodemographics of the three segments were also compared.