Understanding heterogeneous preferences of hotel choice attributes: Do customer segments matter?

Abstract

This study focuses on understanding the heterogeneous preferences for hotel choice attributes across different segments in leisure and business contexts. Data were collected using a choice-based conjoint (CBC) survey from a sample of 513 hotel customers. Using a latent class model (LCM), the results show that there are substantial heterogeneous preferences for hotel choice attributes across segments within the same context. Regarding the impact of price on hotel choice, this study reveals that while business travelers are generally price sensitive, leisure travelers differ within the three segments. Further, not only did leisure travelers in all segments greatly value the entertaining attribute, but so did Segment 5 business travelers in their 40s-60s with high incomes. This study suggests that hotel managers should understand the specific characteristics of customers by segment and the heterogeneous choice preferences by customer segment in order to develop effective marketing strategies.