Determining guests' willingness to pay for hotel room attributes with a discrete choice model. (August 2015)

• Record Type: Journal Article
• Authors: Masiero, Lorenzo; Yoonjoung Heo, Cindy; Pan, Bing
• Is Part Of: International journal of hospitality management. Volume 49(2015)
• Page Start: 117
• Page End: 124
• Publication Date: 2015-08
• Subjects: Discrete choice modeling -- Stated choice experiment -- Hotel amenities -- Willingness to pay -- Revenue management; Hotel management -- Periodicals; Restaurant management -- Periodicals; Food service management -- Periodicals; Hôtels -- Gestion -- Périodiques; Restaurants -- Gestion -- Périodiques; Services alimentaires -- Gestion -- Périodiques; Food service management; Hotel management; Restaurant management; Periodicals; 647.94
• DOI: 10.1016/j.ijhm.2015.06.001
• Languages: English
• ISSNs: 0278-4319

Abstract

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.