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Tourism Management Essay

An importance-performance analysis of hotel selection factors in the Hong Kong hotel industry: a comparison of business and leisure travellers Raymond K.S. Chu, Tat Choi* Department of Hotel and Tourism Management, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong Special Administrative Region, People’s Republic of China Received 16 December 1998; accepted 3 February 1999

Abstract Using an Importance}Performance Analysis (IPA), this paper examined business and leisure travellers’ perceived importance and performance of six hotel selection factors in the Hong Kong hotel industry. The six hotel selection factors identi”ed were: Service Quality, Business Facilities, Value, Room and Front Desk, Food and Recreation, and Security. Both business and leisure travellers held the same perceptions towards all the six hotel selection factors.

The IPA grids illustrated that the Value factor fell into the Concentrate Here quadrant; Service Quality, Room and Front Desk and Security in the Keep Up the Good Work quadrant; and Business Facilities and Food and Recreation in the Low Priority quadrant. Room and Front Desk and Security were found to be the determining factors for business and leisure travellers, respectively, in their hotel choice selection. Implications for Hong Kong hoteliers and researchers were discussed. 2000 Elsevier Science Ltd. All rights reserved. Keywords: Importance}Performance Analysis; Hotel selection factors; Business and leisure travellers

1. Introduction 1.1. The Hong Kong hotel and tourism industry Hong Kong has long been Asia’s most popular tourist destination. The total visitor arrivals for 1996 reached a record of 11.7 million, representing a remarkable 14.7 per cent growth over 1995, with HK$84.5 billion (US$10.8 billion) #owing into the Special Administrative Region’s economy in foreign exchange earnings. The 14.7 per cent growth rate in 1996 out-performed the world average of 4.5 per cent, as well as the average growth rates for East Asia/Paci”c and South Asia, with 7.9 per cent and 4.0 per cent respectively (WTO, 1997). In addition, approximately 8 per cent of Hong Kong’s Gross Domestic Product (GDP) is attributable to tourism (HKTA, 1998). However, since the beginning of 1997, Hong Kong’s inbound tourism industry has experienced an unprecedented decline. As illustrated in Table 1, the Hong Kong Tourist Association (HKTA) revealed that the numbers of visitors declined from 11.7 million in 1996 to 10.4 million in 1997, representing a 12 per cent fall (HKTA, 1998). The fall in visitor arrivals has been aggravated by the regional currency turmoil, which has made Hong Kong an expensive destination to travel in comparison with other Southeast Asian regions (Poole, 1997).

The depreciation of the Thai baht, the Indonesian rupiah, the Malaysian ringgit, and the Philippine peso has inevitably attracted international travellers who prefer to seek bargain visits to these cheaper destinations. Hong Kong is now considered less &vacation-friendly’ than previously as high in#ation has driven up prices. In 1989, 60 per cent of travellers rated shopping in Hong Kong as &above average’ in value for money, but in 1993 the number fell below 45 per cent (HKTA, 1998). In the early 1990s, Hong Kong su!ered from a relatively high in#ation rate of about 10 per cent per annum as a result of an increase in labour and land costs.

This paper attempts to identify both the importance and performance of hotel selection factors in the Hong Kong hotel industry using the Importance}Performance Analysis (IPA) model. More speci”cally, the paper intends to compare perceptions of business and leisure travellers, in terms of importance and performance of hotel selection factors. By identifying the needs, desires and expectations of di!erent segments, hoteliers will be in a better position to develop tailor-made marketing strategies to cater for their target customers and to achieve competitive advantages.

Source: Adapted from A Statistical Review of Tourism, Hong Kong Tourist Association (1998).

2. Literature review cent per annum in recent years (Hueng, 1997). The rising cost of accommodation in Hong Kong and the dwindling number of shopping bargains are continuously a!ecting the Hong Kong tourism industry (Brevetti, 1995). Such price in#ation threatens Hong Kong’s reputation as a Shopping Paradise. Looking at the visitor pro”le, in particular at a comparison of business and leisure travellers, there appears to have not much signi”cant change between the two groups. The leisure segment has constituted almost 60 per cent of total visitor arrivals to Hong Kong over the past ten years, while the business segment contributed up to 30 per cent of total visitor arrivals over the same period (see Table 1). Regarding the hotel industry in Hong Kong, room rates have long been considered as the prime factor that adds to the cost of a trip, contributing to tourism downturn (Beck, 1997; Schloss, 1997). Schloss (1997) reported that Hong Kong hotels are more expensive to stay in than in Tokyo hotels, even when they o!er discounts.

Beck (1997) mentioned that Hong Kong hotels are too expensive and that the high cost is the single factor that continues to a!ect tourism in Hong Kong seriously. Research studies have shown that satisfaction with hotel properties, including services, facilities and price, appears to be one of the major factors leading to the success and repeat patronage of the destination (Shih, 1986; Stevens, 1992). To be successful in business, one must understand how customers perceive the product or service attributes, their importance and performance when compared with other competitors. The importance of &being competitive’ and &o!ering competitive advantage’ has been recognised for some years. In the hotel environment, where competition dominates, hoteliers must study the strengths and weaknesses of the product or service they provide and accurately de”ne their importance and performance.

To maintain Hong Kong’s present status as one of the world’s most attractive tourist destinations, hoteliers 2.1. Importance}Performance Analysis Importance}Performance Analysis (IPA) conceptually underlies the multi-attribute models that date back to the late 1970s. Martilla and James (1977) applied the IPA technique to analyse the performance of the automobile industry. Hawes, Kiser and Rao (1982) and Hawes and Rao (1985) used the IPA concept in retirement communities and health care applications. Sethna (1982) found the IPA technique to be a valid and powerful technique for identifying service quality areas that require remedial strategic actions. The underlying assumption of the IPA technique is that customers’ level of satisfaction with the attributes is mainly derived from their expectations and judgment of the product’s or service’s performance.

IPA has become a popular managerial tool that has been broadly used to identify the strengths and weaknesses of brands, products, services and retail establishments in various industries in recent years (Chapman, 1993; Cheron, McTavish & Perrien, 1989). Hemmasi, Strong and Taylor (1994) measured the service quality of hospital services using IPA as an alternative to the traditional SERVQUAL instrument devised by Parasuraman, Zeithaml and Berry (1988). While Evans and Chon (1989) used the IPA to formulate and evaluate tourism policy, Keyt, Yavas and Riecken (1994) and Hsu, Byun and Yang (1997) adopted the IPA technique in restaurant positioning.

Lewis (1985) used the IPA as a competitive analysis technique to identify tourists’ perceptions of the hotel industry. Lewis and Chambers (1989) reported the e!ective use of IPA by the Sheraton Hotel in monitoring customer satisfaction. Almanza, Ja!e and Lin (1994) used the IPA matrix to determine means for improving customer satisfaction. Martin (1995) examined service providers’ perceptions of customers’ expectations of quality service in the hotel industry using the IPA technique. In an increasingly competitive environment, a determination of the strengths and weaknesses of a have high levels of performance in relation to these activities. In the Low Priority quadrant, attributes have low importance and low performance. Although performance levels may be low in this cell, managers should not be overly concerned since the attributes in this cell are not perceived to be very important. Limited resources should be expended on this &low priority’ cell. Lastly, the Possible Overkill quadrant contains attributes of low importance, but of relatively high performance.

Respondents are satis”ed with the performance of the organisations, but managers should consider present e!orts on the attributes of this cell as being overutilised (Evans and Chon, 1989; Hemmasi, Strong & Taylor, 1994; Keyt et al., 1994; Martilla & James, 1977; Martin, 1995). Fig. 1. Importance}Performance Analysis grid. Quadrant I Attributes are perceived to be very important to respondents, but performance levels are fairly low. This sends a direct message that improvement e!orts should concentrate here. Quadrant II Attributes are perceived to be very important to respondents, and at the same time, the organisation seems to have high levels of performance on these activities.

The message here is To Keep up the Good Work. Quadrant III Attributes are with low importance and low performance. Although performance levels may be low in this cell, managers should not be overly concerned since the attribute in this cell is not perceived to be very important. Limited resources should be expended on this low priority cell. Quadrant IV This cell contains attributes of low importance, but relatively high performance. Respondents are satis”ed with the performance of the organisations, but managers should consider present e!orts on the attributes of this cell as being overutilised.

2.2. Perceived importance and performance of attributes Attribute importance is generally regarded as a person’s general assessment of the signi”cance of an attribute for a product. Many studies have attempted to analyse customer satisfaction in terms of both expectations that relate to certain important attributes and judgments of the attribute performance (Myers & Alpers, 1968; Swan & Coombs, 1976). However, there appears to have been diverse conclusions made about how one should relate attribute importance and performance. The concept of &importance’ is viewed by customers the same as satisfaction (Barsky, 1992; Rosenberg, 1956). When a customer perceives an attribute as important, the customer will believe that the attribute will play a signi”cant role in in#uencing his or her product choice (MacKenzie, 1986).

More recently, the term &importance’ has been used to refer to the perceived importance of an attribute and its e!ect on product or service quality (Carman, 1990). Lilien, Kotler and Moorthy (1993) de”ned the term &important attributes’ as those considered important by consumers, and that the various brands or products are perceived to di!er. Hemmasi et al. (1994), however, stated that performance lies in customer perceptions of performance of the attribute.

Thus, the more favourable the perception of performance, the greater the likelihood of the choice from among similar alternatives. Therefore, it is strategically important for hoteliers to understand and to identify the product (or service) attributes perceived by customers as important, and to examine how customers perceive these product (or service) attributes. It is also very likely that a customer’s favourable post-purchase experience may lead him or her to repurchase if the customer is satis”ed with the hotel performance. 2.3. Hotel attributes in hotel choice selection Those attributes directly in#uencing choice are &determinant attributes’: they may arouse consumers’ purchase intentions and di!erentiate from competitors’ o!erings product’s or service’s importance and performance seems an undeniable constituent of success.

The interpretation of the IPA is graphically presented on a grid divided into four quadrants. Fig. 1 illustrates the IPA grid. The >-axis reports the customers’ perceived importance of selected attributes, and the X-axis shows the product’s (or service’s) performance in relation to these attributes. The four identi”able quadrants are: Concentrate Here, Keep Up the Good Work, Low Priority and Possible Overkill. In the Concentrate Here quadrant, attributes are perceived to be very important to respondents, but performance levels are seen as fairly low. This sends a direct message that improvement e!orts should concentrate here. In the Keep Up the Good Work quadrant, attributes are perceived to be very important to respondents, and at the same time, the organisation seems to (Alpert, 1971). The services and facilities o!ered by a hotel, or hotel attributes, are those features of products or services that lead consumers to choose one product over others (Lewis, 1983).

Wuest, Tas and Emenheiser (1996) de”ned perceptions of hotel attributes as the degree to which travellers “nd various services and facilities important to customers’ satisfaction. Atkinson (1988) found that cleanliness of the accommodation, followed by safety and security, accommodation value for money, courtesy and helpfulness of sta! were identi”ed as top attributes for travellers in hotel choice selection. Wilensky and Buttle (1988) mentioned that personal service, physical attractiveness, opportunities for relaxation, standard of services, appealing image, and value for money were signi”cantly evaluated by travellers.

Rivers, Toh and Alaoui (1991) examined the hotel selection decisions of members and non-members of frequent guest programs. Their results showed that convenience of location and overall service received the highest ratings. Ananth, DeMicco, Moreo and Howey (1992) surveyed 510 travellers, asking them to rate the importance of 57 hotel attributes in hotel choice decision. The results showed that &price and quality’ was rated as the most important attribute across all age categories, followed by attributes related to &security’ and &convenience of location’. LeBlanc and Nguyen (1996), in particular, examined the “ve hotel factors that may signal a hotel’s image to travellers. These “ve factors were: physical environment, corporate identity, service personnel, quality of services and accessibility. They suggested that marketing e!orts should be directed to highlight the environmental cues in order to attract new customers.

An extensive review of the literature for the hospitality industry suggests that attributes such as cleanliness, location, room rate, security, service quality, and the reputation of the hotel have been considered by most tourists in hotel choice decision (Ananth, DeMicco, Moreo & Howey, 1992; Atkinson, 1988; Barsky & Labagh, 1992; Cadotte & Turgeon, 1988; Knutson, 1988; LeBlanc & Nguyen, 1996; Lewis, 1984,1985; Marshall, 1993; McCleary, Weaver & Hutchinson, 1993; Rivers, Toh & Alaoui, 1991; Wilensky & Buttle, 1988).

2.4. Hotel attributes as perceived by business and leisure travellers Many studies have looked into a comparison between business and leisure travellers in their hotel selection criteria. These studies indicated that the important attributes a!ecting business travellers’ hotel choices were cleanliness and location (Lewis & Chambers, 1989; McCleary et al., 1993; Taninecz, 1990), whereas security, personal interactions, and room rates were considered as important by their leisure counterparts (Clow, Garretson & Kurtz, 1994; Lewis, 1985; Marshall, 1993; Parasuraman et al., 1988). Taninecz (1990) found that cleanliness, comfort of mattresses and pillows, and quality of towels received the highest ratings from business travellers. Lewis and Chambers (1989) and McCleary et al. (1993) also found that location was the most important factor in#uencing hotel selection by all business travellers. However, they argued that a hotel’s catering facilities were not important in hotel selection, as there are often many alternative dining choices nearby.

Leisure travellers seem to be more concerned with room rates and value in their initial hotel selection (Lewis, 1985). Parasuraman et al. (1988) found that the quality of personal interactions with employees was a critical component of the service quality evaluation. Employees’ service quality has been cited as important to leisure travellers when selecting overnight accommodation (Parasuraman et al., 1988). Knutson (1988) mentioned that leisure travellers were mainly concerned with a hotel’s safety and security. This concern might stem from the idea that leisure trips often involve families, and these travellers have a high sensitivity to what may occur around them when their families are involved. Marshall (1993) and Clow et al. (1994) revealed that security was cited as one of the most important criteria in selecting a hotel. Tourists want to be safe and secure in their accommodation, and are willing to pay for this.

The safety and security system may di!erentiate one property from its competition, hence becoming a competitive strategy that helps a hotel to gain tourists’ con”dence and trust. Ananth et al. (1992) found that leisure travellers were likely to express concern with regard to a hotel’s reputation and name familiarity. Other studies have suggested that some hotel attributes are seen as important by both business and leisure travellers. Knutson (1988) examined the di!erences between business and leisure travellers in an attempt to determine the attributes that initially attract these two types of travellers to a hotel, and that bring them back.

Her “ndings suggested that the following factors were considered by both business and leisure travellers when selecting a hotel for the “rst time or for repeat patronage: (1) clean, comfortable, well-maintained rooms, (2) convenient location, (3) prompt and courteous service, (4) safe and secure environment, and (5) friendly and courteous employees. Lewis (1984,1985) tested 66 hotel attributes to determine the basis of hotel selection by 1314 business and leisure travellers in six hotels.

The “ndings showed that location and price were the determinant attributes for hotel selection for both business and leisure travellers. Cadotte and Turgeon (1988) examined data from members of the AH & MA (American Hotel & Motel Association) on the relative frequency of 26 categories of compliments. Survey results found that the “ve most frequent compliments were: (1) helpful attitude of employees, (2) cleanliness of establishment, (3) neatness of establishment, (4) quality of service, and (5) employee knowledge of service.


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