The Effects of Price Fairness Perceptions on Customer Response Behaviors in Budget Hotel Sector

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the treatment experience are the critical variables in this study, whether these three reflecting the customer price fairness would be examined in the methodology.

2.3 Response behaviours of customers

Perception of price fairness is significantly related with emotions (Yang, 2005). Hirschman (1970) named three customers’ response behaviours which are exit, voice, and loyalty. With the extension of Hirschman’s theory, Xia et al. (2004) proposed another three actions to reflect customer response behaviours which are no action, never revisit again, and revenge. Since behavioral intentions of customers are also a good predictor of response behavior, for example, behavior related to purchasing, repurchasing, loyalty, and word of mouth, and if customers perceive an unfair price, they will engage in retaliatory actions. Besides, Noone and Mount (2009) examined data from a major full-service hotel chain, which represented leisure customers’ self-reported assessments of their hotel stay. Their findings show that the price paid for the room had a direct and negative effect on customers’ return intentions and may cause customers to turn to another service provider (Varki and Colgate, 2001). Based from the aforementioned literatures, the characteristic factors like age, gender, and the household income lever are still considered in the effect of the customers’ price fairness perceptions, and the correlation between price fairness perception and customers’ response behaviors would be conducted for research in next processes, and both positive response like recommend to others, repurchase and negative reacts are also listed in the dependent variables.

3. Methodology

3.1 Research design

In this study, a quantitative method through questionnaires was used for data collection. This paper focuses on the budget hotel because the customers in this sector would be more cost conscious and appear to seek more reasonably priced accommodation in this hotel sector, and the survey was administered from a Saturday through a Tuesday so the responses collected including both leisure travelers and business travelers.

Customer demographic profiles includes gender, age, purpose of the trip, income level were considered in the first part of research questionnaire (H1, H2, H3). Next part created to measure the observed variables influencing the price fairness perceptions and the customer response intension (H4, H5, H6).

Minimum populations of 50-200 and above respondents are adequate for this study in the budget hotel in Hong Kong. A pilot study was conducted with fifty guests who staying in the Hotel Sav Hong Kong (Hotel Sav features 388 guestrooms and suites) and the descriptive analysis for the variables contributing the perceived price fairness items.

3.2 Research variables

3.2.1 Demographic factors influencing price fairness perception

(a) Gender

(b) Age

(c) Income level

3.2.2 Independent variable: price fairness perceptions

the factors measuring the price fairness perceptions.

(a) Customers’ price expectation (Whether the price achieved your expectation?)

(b) Customers’ experience treatment (How is your staying experience?)

(c) Customers’ familiarity level of the price

3.2.3 Dependent variable: customer response behaviours

(a) Negative emotional response (no action, never revisit, revenge)

(b) Positive response (repurchase intention, recommend to others)

All the variables were measured with a five point Likert scale. (5-point scale: 1 – Not at all satisfied, 2 – slightly satisfied, 3 – moderately satisfied, 4 – Very satisfied, 5 – Extremely satisfied)

3.3 Sampling and data collection

In this study, the customers who are staying in budget hotels in Hong Kong were chosen as the samples. A closed-ended set of questionnaire was conducted to the customers who process the check-out service at front desk to measure the variables of price fairness perception and response behaviour, and the data were coded and keyed in SPSS version 16.

3.4 Data analysis

The data analysis process in this study consist of two sections, first is the influencing factors of the independent variable (customers’ fairness perception), the demographic factors like the age, gender, and the income level. The second one is the effects of factors influencing the price fairness perceptions towards customer response behaviors considering the role of variables like price expectation, experience, and the familiarity level. Section A: the influencing factors of independent variables; Section B: The effects of factors influencing the price fairness perceptions towards customer response behaviors. A descriptive data analysis and the coefficient were used in testing the independent variable of the price fairness perception of the section A. In section B, this paper adopts the regression analysis examining the relationship between the price fairness perception and the customers’ response behaviours.

4. Timeline

A Gantt chart showing the major tasks and time allocated.

5. References

Adams, J. (1965). Inequity in Social Exchange, In L. Berkowiz (ed) Advances in Experimental Psychology. (pp. 267–300). New York: Academic Press.

Ahmat, N. H. C., Radzi, S. M., Zahari, M. S. M., & Kamaruddin, M. S. Y. (2010). Perception of price fairness and customer response behaviors. Jounal of Global Management, 2.

Albert, H. (1970). Exit, voice, and loyalty: Responses to decline in firms, organizations, and states.

Beldona, S., & Namasivayam, K. (2006). Gender and demand-based pricing: differences in perceived (un) fairness and repatronage intentions. Journal of Hospitality & Leisure Marketing, 14(4), 89-107.

Brody, C. J. (1984). Differences by sex in support for nuclear power. Social forces, 63(1), 209-228.

Dabas, S., & Manaktola, K. (2007). Managing reservations through online distribution channels: An insight into mid-segment hotels in India. International Journal of Contemporary Hospitality Management, 19(5), 388-396.

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