Chih-Chien Chen

The Importance of Information Asymmetry in Customers’ Booking Decisions: A Cautionary Tale from the Internet

Information asymmetry is a key building block of revenue management. Would-be customers have far less indication of future rates and availability than do the service providers. Even with the relatively transparent pricing on various Web sites, customers do not know the extent of demand for their desired itineraries. However, a tool that allows customers to book specific airplane seats and hotel rooms gives customers a greater indication of existing demand. A test of a simulated hotel-room-selection site confirmed that knowledge of demand influenced participants’ willingness to book. However, that knowledge was most salient when room rates were high. On the other hand, when rates were low, knowledge about demand levels did not influence bookings.

Progress in Loyalty Program Research: Facts, Debates, and Future Research

For decades, customer loyalty programs have been a distinct avenue to enhance long-term customer relationships. Their efficacy and viability have been widely discussed in the literature. With a focus in the hospitality industry, this article draws on nearly 100 articles on loyalty programs and extant reviews of this research to describe how this field of research has evolved. This article proposes four research themes for classifying this body of work: (a) customer relationship management in loyalty programs, (b) the merits of loyalty programs, (c) the drawbacks of loyalty programs, (d) the advancements in loyalty programs. Using this classification the article identifies areas for future research and formulates unanswered questions. The classification organizes the research for practitioners looking for guidelines for managing loyalty programs.

Hedonic motivations and the effectiveness of risk perceptions-oriented revenue management policies.

The study proposes that deal-seeking travelers’ perception of risk may have a dual and contradicting impact on expected utility and, consequently, on their propensity to search for a better deal and book the travel product. According to a traditionally utilitarian motivation, a high level of risk and the prospect of negative results reduce expected utility, and they are therefore likely to reduce search activities and increase booking. This study argues that, because of hedonic motivations, consumers may enjoy the risk elements of their search for a better deal and, consequently, may respond to higher levels of induced risk perception by increasing search activities and reducing booking. The study explains how this finding affects the way revenue-managing hotels, which seek to affect their customers’ behavior by inducing risk perceptions, should adapt their strategies.

Advanced Booking Decisions of Risk-Averse, Deal-Oriented Travelers

This study modified the Generic Advanced-Booking Decision model. It replaces the assumption about the consumers risk neutrality by an assumption of risk averseness. The result is a considerably more complex set of equations that incorporates the commonly used utility form of U(x)= −e−rX into the travelers decision tree. Using a numerical simulation, this study demonstrated that a solution exists in which each one of the four generic decisions is associated with a room rate range where that decision is the optimal one. The analytical attempt to calculate the modified risk-averse switch points yielded only two of the seven theoretically possible intersection equations. The article discusses the analytical and practical implications of these findings.

The influence of incidental affect and mood-changing price on online booking intention

Purpose This paper aims to examine the joint influence of incidental affect and mood-changing prices on consumers’ hotel booking intention in an online purchase context. Design/methodology/approach Based on the integrative framework of affect evaluation and affect regulation, a 3 × 2 full factorial between-subject online experiment in an online booking scenario is developed to investigate how consumers’ booking intentions change by mood inductions (happy, neutral and sad) and price levels (below versus above reference price). Findings Results showed that when the observed price was a mood-threatening cue, participants who were induced to feel either happy or sad by a commercial had a higher booking intention than those who were induced to feel neutral. However, there were no significant differences in participants’ booking intentions across pre-purchase affective states when the observed price was a mood-lifting cue. Research limitations/implications The current study contributes to a better understanding and prediction of consumers’ action tendencies resulting from the interactions between specific incidental affects and mood-changing opportunities in an online hotel reservation environment. Practical implications Online booking companies and online travel agencies in general may wish to incorporate mood-changing components into their booking web pages to enhance potential bookers’ purchase intentions at any given price. Originality/value This research is one of the first empirical studies to instantiate the integrative affective mechanism in an online purchase setting. As e-commerce and online marketplaces are taking the place of traditional brick-and-mortar retailing, it is critical for hospitality industry marketers to fully understand how consumers’ pre-purchase emotions influence their purchase decisions.