Hotel selection: When price is not the issue

Abstract

To maintain desired room occupancy rates, one of the common strategies a hotel will normally adopt is cutting price. This trend greatly affects a hotel's profits and may result in the deterioration of a hotel's status. Many hotels consequently discover new competitors and fail to retain guests in the long run as the guests tend to be sceptical about the level of the advertised price reduction. This implies that hoteliers need to have a better understanding of how such factors beyond ‘price’, such as the quality of their services and their facilities, influence the booking behaviour of customers. This study, which surveyed 573 Frequent Individual Travellers (FITs) to the Hong Kong SAR, found that beyond ‘price’, ‘convenient hotel location’ and ‘good service’ were the key factors influencing FITs in their final selection of hotel. Business travellers tend to place more emphasis on their previous hotel experience; good service; convenience and company recommendation; whereas leisure travellers and those with a lower level of education valued travel agents’ recommendation. Repeat male visitors and western travellers valued good hotel reputation, while the impact of subjective norms on big spenders was high.