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

Lorenzo Masiero, Cindy Yoonjoung Heo, Bing Pan

Research output: Journal article publicationJournal articleAcademic researchpeer-review

49 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)117-124
Number of pages8
JournalInternational Journal of Hospitality Management
Volume49
DOIs
Publication statusPublished - 1 Aug 2015

Keywords

  • Discrete choice modeling
  • Hotel amenities
  • Revenue management
  • Stated choice experiment
  • Willingness to pay

ASJC Scopus subject areas

  • Tourism, Leisure and Hospitality Management
  • Strategy and Management

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