Do luxury room amenities affect guests' willingness to pay?

Abstract

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.