Do luxury room amenities affect guests’ willingness to pay?

International Journal of Hospitality Management 46 (2015) 161–168

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International Journal of Hospitality Management journal homepage: www.elsevier.com/locate/ijhosman

Do luxury room amenities affect guests’ willingness to pay? Cindy Yoonjoung Heo a,∗ , Sunghyup Sean Hyun b,1 a b

École Hôtelière de Lausanne / HES-SO, Lausanne, Switzerland School of Tourism, Hanyang University, Seoul, Republic of Korea

a r t i c l e

i n f o

Keywords: Room amenity Positivity bias Willingness to pay Luxury brand Hotel room pricing

a b s t r a c t Intangible services have fewer cues to enable consumer evaluation compared to physical goods. Cues are therefore particularly important for highly intangible services, since they provide tangible evidence of quality. This study explores whether luxury brand room amenities can be used as cues for customers to evaluate a hotel. This study attempts to identify what items and amenities guests find most/least useful and to examine whether luxury brand room amenities can enhance customers’ evaluation of a hotel and increase willingness to pay based on positivity bias. Wi-Fi was regarded as the most useful hotel amenity, while telephone was regarded as the least useful amenity. This study found customers willingness to pay is affected by providing luxury brand room amenities. When luxury amenities were placed in the room, customers’ estimation of the room rate and their willingness to pay for it both increased. Moreover, about two out of five expressed a willingness to pay extra for an upgrade to access luxury brand room amenities. The findings of this study provide important implications for hotel practitioners. © 2014 Elsevier Ltd. All rights reserved.

1. Introduction Services are different from products, in that they have a number of unique characteristics including intangibility, inseparability of production and consumption, heterogeneity of quality, and perishability (de Chernatoy and Segal-Horn, 2001). The first of these characteristics means that customers must rely on a number of evaluative cues to evaluate service quality. One of the main challenges for the hotel industry has therefore been tangiblizing the intangible hotel experience (Berry, 1986; Levitt, 1981). Tourism and hospitality researchers urge practitioners to make use of concrete images and cues to make services as tangible as possible. Intangible services have fewer cues to enable consumer evaluation compared to physical goods. Cues are therefore particularly important for highly intangible services, since they provide tangible evidence of quality (Brandy et al., 2005). A product’s brand name is one of the most important such cues. It represents images that have been formed based on customers’ past experience with a brand or information they have obtained about it. One way to overcome the challenge of intangibility can be by creating a strong brand, which

∗ Corresponding author. Tel.: +41 78 803 6088. E-mail addresses: [email protected] (C.Y. Heo), [email protected] (S.S. Hyun). 1 Tel.: +82 2 2220 0862. http://dx.doi.org/10.1016/j.ijhm.2014.10.002 0278-4319/© 2014 Elsevier Ltd. All rights reserved.

represents the hotel’s services and generates some of the tangible characteristics of an actual product. Strong brands help customers to better visualize and understand the intangible side of products and services. As consumers become more sophisticated and the market more diverse, expectations of service quality are likely to increase. It is vital for companies to be consistently aware of their customers’ needs and desires. In order to meet these needs, hotels offer different types of amenities and service levels to their guests. This study explores whether luxury brand room amenities can be used as cues for customers to evaluate a hotel. Hotel operators often rely on an intuitive sense that brand room amenities will enhance customer satisfaction and improve performance. However, every amenity has a cost, and adding more such facilities requires hotels to make more investment. The volume of amenities and the associated costs have a direct impact on maintenance bills and so should also be considered. The profitability or desirability of amenities increases only when new or different ones are valued and used by customers. Thus, this research focuses not on the volume or type of such amenities but on their luxury branding. This has important implications for marketing and pricing strategy of hotels. Marketing approaches and pricing structure can be designed more effectively if hoteliers understand the effects of luxury room amenities on guests’ evaluations and willingness to pay for such amenities. The main objective of this study is therefore to identify what items and amenities guests find most/least useful. In particular, it

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attempts to examine whether customers believe that luxury brand room amenities give the hotel some kind of premium image, as well as whether customer perceptions of the hotel enhance willingness to pay for rooms. 2. Literature review 2.1. Pricing in the hospitality industry Pricing issue has gained considerable attention from hospitality scholars, because effective pricing decision is critical for the long-term success of hospitality business. Most studies have been conducted on pricing strategy in the hospitality industry from a demand-side perspective. Many researchers explored the determinants of hotel room rates from various perspectives. Israeli et al. (2001) suggests that companies can signal strategic assets to target markets to justify premium price. Israeli and his colleagues examined the degree to which strategic assets such as corporate affiliation, brand name, and hotel size, predict the hotel room price in Israel (Israeli and Uriely, 2000; Israeli et al., 2001; Israeli and Reichel, 2001; Israeli, 2002). The major finding of these researches was that star rating is a better predictor of hotel room price than corporate affiliation (Israeli, 2002). Lee (2011) examined the determinants of hotel room rates in Singapore by applying volatility clustering modeling framework and found that total inbound tourists and economic performance have positive effects on hotel room rates. In addition, the study found that the occurrences of terrorist activities in the neighboring countries have negative impacts and the volatility of hotel room rates has a positive effect on hotel room rates. Hung et al. (2010) found hotel age and market conditions are only significant determinants in high-price hotels, and the proportion of foreign individual travelers positively influences room rate. More recently, Becerra et al. (2013) examined the effects of vertical and horizontal differentiation on pricing policy of hotels in Spain. The study found hotels with more stars (i.e., vertically differentiated) and hotels that belong to a branded chain (i.e., horizontal differentiation) offer smaller discounts over listed pries, in addition to charging higher prices. Although a variety of approaches such as conjoint analysis (e.g., Goldberg et al., 1984), latent growth curves (e.g., Coenders et al., 2003), and quantile regression approach (e.g., Hung et al., 2010) have been applied, the hedonic pricing technique is one of the most widely employed technique for hotel room pricing from demand-side perspective. This technique views goods and services as collections of attributes or characteristics. Rosen (1974) argued that products or services can be described as combinations of different attributes or characteristics. The hedonic pricing approach is the idea that the observed price of any such product or service is the sum of the unobserved prices of the bundle of attributes associated with it. Chen and Rothschild (2010) employed hedonic pricing method with data obtained for 73 hotels in Taipei and found that hotel location, the availability of LED TV and the presence of conference facilities have significant effects on both weekday and weekend room prices. Espinet et al. (2003) examined the effect of different characteristics of holidays hotels on price from the hedonic function perspective. The study found that there are huge price difference between 4-star hotels and the rest and town, hotel size, distance to the beach and availability of parking place have significant effect on price. Abrate et al. (2011) explored the relationship between quality signals and price setting and found reputationbased quality signals are related to price levels. Kuminoff et al. (2010) focused on the impact of hotel’s green amenities on hotel room rates and found that hotel customers can expect to pay premiums between US$9 and US$26 for a standard room in a green hotel. While most research on hotel room pricing has been studied from a supply side perspective, a few researchers have explored

the issue from a demand side perspective. For example, Monty and Skidmore (2003) estimated consumers’ willingness to pay for hotel attributes using data obtained from consumers. Using data on price and amenities collected from bed and breakfast accommodations in Southeast Wisconsin, location, day of week, and time of year are found to be important determinants of price, but fireplaces, themes, scenic views and room service were not significant determinants. Danziger et al. (2006) investigated the contribution of strategic assets including price, brand name, star rating, number of rooms, number of restaurants, location and pool size, in determining customer perceptions of hotel room price in the Israeli hospitality industry. In their study, participants were asked to estimate the market price of hotel room after acquiring information on competing hotels. Price and star rating information was most frequently selected and brand information was selected more frequently when star information was not available than when it was available. Kang et al. (2012) focused on green initiatives of the hotel industry and examined hotel guests’ willingness to pay a premium for environmentally friendly and sustainable practices of the U.S. hotel industry. Their study found that luxury and mid-priced hotel guests are more willing to pay premiums for hotels’ green practices than economy hotel guests. Abundant research has been conducted on pricing issue, however, relatively limited studies focused on hotel room pricing from a customer’s perspective. Moreover, most studies have included hotel’s strategic assets (i.e., hotel size and brand name) and external factors (i.e., market condition) to predict hotels room price. While the findings of previous studies have contributed to hospitality literature, they provided limited practical implications to hotels, because strategic assets and external factors are rather difficult for hotels to change or control within a short time. Guest room amenities can be understood as a kind of software for hotels, because changing room amenity items or brands is relatively easy. Therefore, this study focused on the effect of guest room amenity on customers’ willingness to pay from a demand side perspective in order to provide practical implications to hoteliers. Although several scholars explored hotel room pricing from a customer’s perspective, this study is different from previous studies (e.g., Monty and Skidmore, 2003; Chen and Rothschild, 2010). The distinguishing feature of this study is the application of focus group interviews (FGI) to identify important guest room amenities from a customer’s viewpoint and experimental settings to examine whether luxury brand room amenities can increase their willingness to pay. 2.2. Hotel room amenities Hotels try to find out about their customers’ needs and desires and provide proper service and amenities to meet these, as guests become more sophisticated and the market more diverse. Since flat screen TVs and DVD players are now standard at most upscale properties, hotels must try to distinguish themselves by focusing on outstanding service and unique amenities. Marriott is in the process of upgrading the toiletries used in its properties around the world. Its luxury Ritz-Carlton chain also upgraded its toiletries early in 2013, using Asprey’s Purple Water line. Asprey is a UKbased brand known for its Purple Water fragrance, as well as jewellery, leather items, and other luxury goods. Marriott’s midpriced brands, including Courtyard, SpringHill Suites, Residence Inn, and TownePlace Suites, provide Paul Mitchell hair care products, a line typically sold in upscale salons. Similarly, in 2012, the InterContinental chain began to stock its guest bathrooms with high-end Agraria toiletries, a line typically found in upscale US department stores such as Bergdorf Goodman and Saks Fifth Avenue. Guests can now find Shanghai Tang toiletries in the bathrooms of the Mandarin Oriental hotels in Las Vegas, Miami, New York, and Atlanta. Hoteliers seem to believe that upgrading to an

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upscale toiletry line can help increase the hotel’s appeal to guests. Despite growing industry interest in this issue, however, the effect of hotel room amenities on guests’ perceptions has attracted relatively little research attention so far. According to the American Hotel and Lodging Association, the Four Seasons was the first hotel company to offer in-room amenities such as name-brand shampoo, in 1975. In general, an amenity is defined as an extra service or product given to guests by the hotel, typically at no extra charge. Hotel amenities are defined as any extra product or service found in the hotel: a swimming pool, concierge desk, health spa, and so on (Vallen and Vallen, 2005). Casado (2000, p. 127) defined guest amenities as “non reusable supplies” or “items that guests are expected to use up or may take away with them at the end of their stay.” Similarly, Jones (2005, p. 135) addressed that “the term amenity is commonly used to identify luxury items that a hotel gives away to its guests at no extra charge, although the cost of those items is often hidden in the room rate.” Room amenity is a term broadly used to describe the shampoo, conditioner, body lotion, soaps, and other products left in the guest room for guests’ use, and is the focus of this study. Researchers have examined target customer preference for amenities and the importance of particular guestroom services (Griffin et al., 1996; Dolnicar, 2002). Bernstein (1999) suggests that customers expect higher levels of luxury in their accommodation and amenities when they travel for leisure. Goldberg et al. (1984) examine the relationship between premium price and hotel amenities using a hybrid conjoint analysis. They show that a simple function of the self-reported utility of the components of an amenity bundle is not a good predictor of customer preferences for the bundle as a whole. The overall bundle price adds significantly to the accounted-for variance in preference. Stringam (2008) compares vacation ownership amenities with those in hotel and resort hotels. In fact, however, in the late 1970s and early 1980, the increase of guestroom amenities began to be referred to in the industry as “amenity creep” (Vallen and Vallen, 2005). Each hotel chain tried to outdo all the others by stocking bathrooms with the maximum possible number of soaps, lotions, and shampoos (Bernstein, 1999). However, these were often not valued or perceived as luxurious by customers in their target markets. What was an ‘extra’ or ‘special’ item to provide a competitive advantage became a guest expectation and therefore no longer extra or special. Besides, competitors often quickly matched the amenity offerings and customers thus became conditioned to expect them as part and parcel of the hotel or resort (Stringam, 2008). Hennessey (1998) warned that hotels should recognize amenity creep before it devours property profits. Amenities should be changed or added to only when customers appreciate them and a hotel can expect better performance as a result. While the topic related to guest room amenity has been discussed in considerable non-academic literature in the form of industry magazines and trade journals, there is limited academic research pertinent to this important issue. Thus, this study focuses on guest room amenities and assumes that luxury brand room amenities can enhance customers’ evaluation of a hotel and increase willingness to pay based on positivity bias. 2.3. Luxury brand and positivity bias A number of researchers have developed and tested models of consumers’ perceived value with special emphasis on the use of extrinsic cues. Such cues include brand name, store name, price as indicator of quality, and value (Dodds et al., 1991). Branding is therefore an important issue in the global hotel industry. Simoes and Dibb (2001) argue that branding plays a special role for service companies because strong brands increase customers’ trust in the

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invisible, enabling them to better visualize and understand the intangible and reduce perceived risk. How individuals use information related to products and services in order to assess them has attracted extensive research attention since Leavitt (1954) first examined the use of price in evaluating product quality. Studies on information recall and use (see for example Johnson and Russo, 1984; Park and Lessing, 1981) suggest that prior knowledge about a product and service (or familiarity with the product or brand) influences the extent to which consumers recall and use information in the evaluation of service quality and choice of service offerings. Marketing researchers have examined individuals’ tendency to use product-related information like brand and price to impute quality. For example, Rao and Monroe (1988) show that prior knowledge of a product or familiarity with it has a moderating effect on the degree to which an extrinsic cue (price) and intrinsic product information (physical and performance attributes) is used to evaluate quality. This implies that when individuals’ brand familiarity increases, the use of intrinsic cues for service quality assessments becomes stronger. Moreover, the relationships between luxury brand names, consumer evaluations of a product or service quality, and emotional response have been extensively discussed in the literature. The Merriam-Webster Dictionary defines luxury as “a condition of abundance or great ease and comfort” or “something adding to pleasure or comfort but not absolutely necessary.” Nueno and Quelch (1998, p. 61) define luxury products as those “whose ratio of functionality to price is low, while the ratio of intangible and situational utility to price is high.” Similarly, Hagtvedt and Patrick (2009) conceptualize a luxury brand as one that has premium products, provides pleasure as a central benefit, and connects with consumers on an emotional level. The power of brands to communicate a complex message quickly with emotional impact can be explained by positivity bias. Brand positivity effects denote the tendency for singular assessments of products and brands to result in overly positive evaluations. Posavac et al. (2004) explore the consequences of singular evaluation on consumers’ judgments about products, choice intentions, and actual choices across very different categories and demonstrate the existence of brand positivity effects. Skowronski and Carlston (1987) suggest that when positive cues are more diagnostic than negative cues, a positivity bias effect should occur. Folkes and Patrick (2003) empirically observe positivity bias in the case of services. Their study examines the effect of positive or negative information about a single employee on perceptions of others providing the same type of service in the company. Customers tend to infer positive qualities for the firm and its staff if they have a good experience with one service employee. When individual service providers are regarded positively, customers will infer that other staff share these characteristics to a greater extent than they do with a negative evaluation, and so will perceive other service providers in the company positively as well. Thus, it tries to identify whether positivity bias applies to the relationship between luxury brand room amenities and a hotel. It is proposed that such amenities may be used to enhance the hotel’s image and accordingly both increase customers’ willingness to pay and also encourage them to return by increasing the hotel’s appeal. This issue is important because price is a key element in the organization’s profit equation and therefore is directly linked to profitability. Willingness to Pay (WTP) is the maximum amount a consumer is willing to spend for a product or service; it is also referred to as reservation price (Monroe, 2003) or the maximum of the price tolerance span (Herrmann et al., 2004). WTP is a measure of the value that a person assigns to a consumption or usage experience in monetary units (Homburg et al., 2005) and has been used to measure the attractiveness of services (Goebel et al., 2012). Knowledge of consumers’ WTP is crucial in estimating demand

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and designing optimal pricing (Wertenbroch and Skiera, 2002). The main focus of this study is to examine whether there is a positive relationship between luxury room amenities and WTP. 3. Research methods 3.1. Study design This study employed a between-subjects design to examine the effects of luxury room amenities on respondents’ willingness to pay. Three experiments were conducted in the Tomorrow’s Guestroom of Hotel ICON, an upscale hotel in Hong Kong, over a period of six weeks. Tomorrow’s Guestroom is a prototype room specially designed to facilitate academic research in the field of hotel management. Its size, shape, and setting are different from other rooms in the property. The items and brands to be used as the luxury amenities were selected based on the findings from two focus group interviews (FGI). The first FGI was conducted with four hotel guests, and the second with three hotel practitioners working in rooms departments. The details of the three experimental settings are shown in Table 1. The first room (Setting 1) was a regular hotel room with nobrand amenities. To examine the positivity effects of luxury brand room amenities, these were replaced in the second room (Setting 2) with twenty luxury branded amenities. These include personal care items and toiletries (Chanel No. 5 perfume, Aveda hair products, Fresh body products, and so on); electronic devices (Bose headphones, Nespresso coffee machine, Osim foot massage chair, and so on); and mini bar items (Evian and Pierre bottled water, and so on). Furthermore, to examine whether providing a further explanation of luxury brands influences customers’ perceptions, table tents explaining each luxury brand were placed next to the amenities in the third room (Setting 3). All respondents were required to visit only one of the three guestrooms for 20–30 min and then fill in a questionnaire. Respondents were allowed to use all the amenities in the room and received a HK$80 (US$10) cash voucher for the hotel restaurant as an incentive. The first part of the questionnaire consisted of open-ended questions aiming to identify the most/least useful hotel amenities for guests, followed by questions about their travel behavior such as type of hotel in which they usually stayed and frequency of travel. Respondents were then asked to list all the brand names they could recall, to estimate the room rate, and indicate the maximum amount they would be willing to pay for the room. The survey also asked respondents to identify the one item they would like to upgrade the room for and the WTP for that item. Demographic details such as gender, age, ethnicity, annual income, and education were also collected in the last section of the survey. 3.2. Respondents’ profile A total of 377 hotel guests participated in the survey, and the number of respondents across the three room settings did not vary significantly (nS1 = 122; nS2 = 139; nS3 = 116). Table 2 shows that the proportion of male and female respondents was similar, with 189 females (50.1%) and 188 males (49.9%). The corresponding numbers of respondents aged below 20, 30–39, 40–49, and Table 1 Experimental design.

Room amenities

Setting 1

Setting 2

Setting 3

Standard amenities (no-brand name amenities)

Luxury brand amenities

Luxury brand amenities with explanations about brands

Table 2 Respondents’ demographic profiles (N = 377). Frequency Gender 189 Female Male 188 Age 18 Below 20 103 21–29 87 30–39 40–49 77 50–59 74 60 or above 18 Ethnicity 185 Caucasian 145 Asian 47 Others a Highest education level completed High school or less 67 32 Associate’s degree 149 Bachelor’s degree Master’s degree 100 28 Doctoral degree Individual annual incomeb S1**

6.404**

T3 > T2**

3.342*

E2 > E1*

1.234

–

Hotel typea

Ethnicitya

Trip purposea a

Only the responses in hotel settings 2 and 3 are included in the analysis. * indicates two-tailed significance at the 5% level. ** indicates two-tailed significance at the 1% level. b

guest room with standard amenities (setting 1), which is significantly lower than that for the room equipped with luxury brand amenities (MS2 = US$230.17), at the 5% significance level. The average rate for setting 1 was also significantly lower than that for the room which included an explanation of the luxury amenity brands (MS3 = US$264.43), at the 1% significance level. Though the amounts respondents expected to pay for the rooms in settings 2 and 3 are significantly higher than for setting 1 at the 5% level of significance, the post hoc analysis no significant difference between settings 2 and 3 at the same level (p > 0.05). In terms of the effect of demographic characteristics on the amount guests expected to pay, Table 6 shows group differences for ethnicity and type of hotel usually chosen by respondents, but not for trip purpose. Looking at the responses from guests who participated in settings 2 and 3, post hoc analyses report that those who usually stay in luxury hotels generally estimated a higher room rate in the experiment than did those who stay in mid-priced properties, this being significant at the 1% level (F(2, 252) = 6.404, p < 0.01; MLUX = US$279.86; MMID = US$218.91). On the other hand, Asian respondents’ room rate estimates were higher than Caucasians’ (F(2, 252) = 3.342, p < 0.05; MASI = US$278.88; MCAU = US$231.44). Similar findings were found when comparing maximum amount the respondents were willing to pay for the room. Table 7 reports significant differences in maximum room rate across the different settings (F(2, 374) = 6.885, p < 0.01). In general, the maximum willingness to pay for the room was higher than estimated room rate. For example, the maximum willingness to pay for setting 1 was US$ 236.16, while their estimated room rate for setting 1 was only US$194.63. The maximum amount for setting 3 (MS3 = US$305.78) was significantly higher than for setting 1 (M S1 = US$236.16) at the 1% significance level. Though the maximum

amount for the rooms in settings 3(MS3 = US$305.78) are higher than for setting 2 (MS2= US$268.71), the post hoc analysis found no significant difference between settings 2 and 3 at the 5% level of significance. A difference was also identified across different ethnic groups (F(2, 252) = 6.495, p < 0.01) and hotel type usually chosen by respondents (F(2, 252) = 5.131, p < 0.01). The maximum amount of respondents (MLUX = US$324.31) usually stay in luxury hotels generally are significantly higher than those who stay in mid-priced properties (MMID = US$257.77) or economy properties (MBUD = US$268.38). In addition, Asian respondents’ willing to pay for hotel room with luxury amenities (MASI = US$341.09) is higher than Caucasian respondents (MCAU = US$259.90) at the 1% level of significance. To gain more insight into hotel guests’ preferences, respondents in settings 2 and 3 were also asked to name the most favorable amenities they would like to see in an upgraded room. In setting 2, the Osim massage device was the most frequently mentioned branded item, with 43 citations. The Nespresso coffee machine, another item added to the manipulated setting, was the second most popular (with 17 instances). A Simons mattress and B&W Zeppelin music player ranked third and fourth, receiving 11 and 10 mentions in setting 2. In the setting with additional explanations of the branded amenities, the Osim massage devices continued to be the most popular item from consumers’ perspective. Three items each received 9 mentions as the second most popular item, namely the Nespresso coffee machine, Simons mattress, and B&W Zeppelin music player. Table 8 shows the top 10 amenities that respondents would upgrade for. One of the core objectives of this study was to examine guests’ willingness to pay extra for an upgrade to access luxury brand room amenities. Of those participating in setting 2, 53 out of 135 (39.3%)

Table 7 One-way ANOVA test on maximum willingness to pay for the room per night. Variable

Options

n

M

F/tb

Findingsb

Hotel setting

S1: Room S2: Room (amenities) S3: Room (amenities and description) T1: Economy T2: Mid-priced T3: Luxury E1: Caucasian E2: Asian E3: Others P1: Leisure P2: Business

122 139 116 16 135 104 144 75 36 194 58

236.16 268.71 305.78 268.38 257.77 324.31 259.90 341.09 272.61 293.98 260.14

6.885**

S3 > S1**

5.131**

T3 > T2**

6.495**

E2 > E1**

1.380

–

Hotel typea

Ethnicitya

Trip purposea a

Only the responses in hotel settings 2 and 3 are included in the analysis. * indicates two-tailed significance at the 5% level. ** indicates two-tailed significance at the 1% level. b

C.Y. Heo, S.S. Hyun / International Journal of Hospitality Management 46 (2015) 161–168 Table 8 Top 10 favorable amenities to upgrade. Branded item

Frequency Setting 2

Setting 3

Total

Osim foot massage devices Nespresso coffee machine Simons mattress B&W Zeppelin music player Massage shower Digital mirror Bath amenities Samsung television Bose headphone L’occitane hand cream

43 17 11 10 9 8 6 7 7 4

36 9 9 9 8 6 6 3 3 3

79 26 20 19 17 14 12 10 10 7

were willing to pay extra for upgrading. Of those 53, 48 (90.6%) would pay less than US$100. Five consumers claimed that they would pay more than US$100, and one would pay US$201 or more. In setting 3, around half of the respondents allocated to this experiment (47.1%, n = 49) were willing to pay extra for an upgrade. Excluding one response which did not mention an amount, 87.8% (n = 43) were prepared to pay an additional US$5 to US$100; 3 would pay US$101–200; and 2 would pay US$201 or above. Though settings 2 and 3 were not identical, the findings from the independent t-test reported that the average amounts customers would be prepared to pay for an upgrade to each were not significantly different (t(100) = −0.841, p = 0.402). 5. Conclusions and practical implications Appropriate amenity selection can enhance customer satisfaction and assist in reducing costs in terms of both the amenity itself and also the costs of servicing the room, thus helping a hotel’s profitability (Jones, 2005). This study attempted to identify the most and least useful hotel room amenities from the guest’s perspective and also to examine whether luxury brand room amenities affect WTP for a hotel room. The findings have several implications for practitioners. Firstly, Wi-Fi Internet access in the room is considered the most important item regardless of customer gender, ethnicity, trip purpose, and hotel type. Although Internet service is now standard for hotels, some hotels only provide Wi-Fi in public spaces like the hotel lobby or require guests to use cable to connect to the Internet in their room. Nowadays many people travel with multiple mobile devices such as smartphones and tablet computers, so in-room WiFi is indispensable. Therefore, hotels need to offer this service in guestrooms to prevent customer dissatisfaction. Secondly, the findings support the assumption that customers’ WTP is affected by providing luxury brand room amenities. It has been shown that this exerts a positivity effect on customers’ perceptions of the room. When luxury amenities were placed in the room, customers’ estimation of the room rate and their willingness to pay for it both increased. This suggests a number of important practical implications for designing room amenities and setting prices. Hoteliers may provide luxury brand room amenities to justify high room rates during peak periods. Amenity items or brands can be rate fences for revenue managers. Hotel chains like Marriot and InterContinental are currently upgrading their amenities with luxury brands. However, they are not charging higher rates for those upgraded amenities. While luxury room amenities appear to be seen as a competitive advantage, their continuing costs is also a matter of concern. The findings of this study indicate that some customers are in fact willing to pay extra for luxury amenities in their room. When the respondents in this study were shown the luxury amenities, about two out of five expressed a willingness to pay extra. Hotels may utilize room amenities as revenue

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stream, rather than just a complementary element. On the other hand, some guests will not care about room amenities or luxury brands and therefore will not appreciate upgraded amenities. For those customers, the effort and cost of upgrading will not have any positive outcomes. Hotels are perhaps better to let guests choose what they want. Conrad Hotels and Resorts introduced personalchoice amenities in 2012. Guests can choose from a selection of Aromatherapy Associates, Shanghai Tang, and Tara Smith Vegan Hair Care luxury bath products. Guests receive a list of bath amenity options to help customize their experience before arriving at a Conrad property, or they can make their selection upon arrival, but their choice does not affect the room rate. Hotels may allow guests to choose their own preferred items and brands and vary the rates according to their selections. By doing so, hotels can expect higher customer satisfaction and enhanced revenue. In this study, the most favorable amenity for which customers were prepared to upgrade was the Osim foot massage device. This may be related to the trend for wellness tourism and healthy hotels. When people travel nowadays they want to stay healthy. Gyms, pools, and spas are now standard at many hotels, but international chains and boutique hotels are enhancing their offering by extending customized services like spa, jogging routes, in-room workouts, yoga programs, and gluten-free and vegan menus. In 2012, the InterContinental Hotels Group introduced the new hotel brand concept, EVEN hotels, as a wellness-focused hotel, with plans to open the first property in 2014. Demand for healthy travel is expected to increase and hoteliers need to find a way to accommodate guests’ needs in this area. Providing health-related room amenities and brands may be one way to do so. Room amenity management can be understood as a kind of software for hotels. Changing room amenity items or brands is relatively simple compared to upgrading the physical facilities and setting of the hotel. Hotels can identify preferred brands and amenity items valued by their customers and place them in rooms in order to enhance perceived value and customer satisfaction. However, there are several other issues hoteliers should also consider. Guests staying at upscale hotels may prefer different items and brands from those staying at budget properties. These results indicate that gender, ethnicity, and usual choice of hotel type all relate to preferred room amenities and WTP. An interesting finding of this study is that female respondents generally recalled personal care items (such as Chanel No. 5 perfume and L’Occitane hand cream), while males recalled electronic products (such as Bose headphones, the Nespresso coffee machine, and Samsung television). This may provide some marketing hints in terms of displaying recallable items in online or printed advertisements in order to attract the attention of men or women.

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