It is necessary to understand the hotel segmentation in order to maximize the revenue substantially as hotels face unparalleled competitive challenges and operate under intense market competition resulting from an excessive supply of rooms. Since busi...
It is necessary to understand the hotel segmentation in order to maximize the revenue substantially as hotels face unparalleled competitive challenges and operate under intense market competition resulting from an excessive supply of rooms. Since business travelers are the major segment served by hotels, 60% of the room revenue, a number of studies in the past investigated their hotel selection behaviour and related issues. Given that hotel choice behavior involves a decision process consisting of a number of discrete but interlinked stages and choice criteria are central to the process, a plethora of past research investigated how business travelers choose a hotel.
However, these business travelers are followed to make a hotel reservation based on their corporate company contract made globally and locally. Having contracted with hotels, the corporate company can manage to control the travel cost for business travelers and increase the bargaining power in the process of recontracting with the hotel resulting in the economic benefit. Consequently hotels try to make various marketing strategies to make a contract with corporate companies especially focusing on the key accounts with a great number of room nights production and revenue.
Therefore the study reported in this dissertation expands on earlier research and the first attempt is made to examine the hotel selection criteria used by corporate company as an organizational buying scale. Specifically, this study first seeks to determine the underlying configurations of hotel contract factor by corporate company and then tries to ascertain the influence of these factors on switching barriers and recontract intention. Hence, this research can contribute to providing useful information and competitive advantage for marketing action.
Documentary researches were examined to identify the difference with the existing studies for hotel selection attributes by corporate companies and an expert survey was analytically conducted as in-depth interview to decide the adequate sample. The result can be summarized as follows:
First, six factors were found as the important factors in the corporate company decision for the contracted hotel such as 'benefit', 'persistency', 'trust', 'accessibility', 'aesthetic' and 'convenience'. Second, when the company considered benefit, trust and aesthetic as the prominent factors, they were also very sensitive to switching cost and regarded it as a critical element. In addition, the more persistency, trust and convenience was exceptionally considered, the more interpersonal relationship was set a high value. Having considered accessibility as the influential part, the attractive of alternatives was of no account showing the satisfaction with the existing selection was considerably high. Third, it was revealed that benefit, persistency and accessibility have a decisive effect on recontract with the hotels.
Fourth, for the purpose of the survey, the companies were divided first of all into a higher user and lower user group in terms of the annual production by five hundred room nights. For the higher user company, benefit was the most crucial factor and this group also placed on emphasis on interpersonal relationship and trust since the switching cost was regarded as the important aspect. The most distinct difference for the higher user group seemed to have no attractive of alternatives because they were satisfied with the current contract hotel as far as the accessibility was concerned.
The corporate companies tend to limit the contracted hotels and increase the room nights within them bringing about a better negotiating position for the rate and benefits and building up the close partner relationship. Finally, there was an attempt to analyze two groups, a minority and majority group. A minority group was identified as less than four contracted hotels and it was analyzed to find out the important factors related to the hotel contract. As a result, they considered benefit as the most significant factor and accessibility and aesthetic were subsequently followed. Furthermore, comparing to the majority group, since trust and interpersonal relationship was considered as essential factors, the loyalty towards the contracted hotels was intensively strong and attractive of alternatives was a relatively low-level.