How the Road Warrior Chooses a Hotel: Price, UGC and Loyalty

By Kelly McGuire Vice President, Advanced Analytics, Wyndham Destination Network | May 29, 2016

Co-authored by Breffni Noone, Associate Professor at the Pennsylvania State University School

Consumers have more information than ever before when they are making a hotel room purchase. In addition to traditional information like price and brand, they now have access to new information like reviews, ratings and TripAdvisor Rank. The question is: how do consumers use all this information, with price, to establish value and ultimately make a purchase decision? Understanding this, particularly across different segments of guests, will help hotels make better pricing and positioning decisions.

We wrote about our study results, that compared and contrasted business and leisure traveler's decision making processes, in this publication previously. In this article, we describe a new look at business traveler behavior. The road warrior, or frequent business traveler, represents a large and very valuable segment for hotels, most particularly, the unmanaged business traveler, those that are not overly governed by a corporate travel policy. As we starting thinking about this growing segment, we realized that this group is potentially highly influenced by their loyalty affiliation. Loyalty programs reward frequent travel with free nights, which can be a very attractive benefit. Would this desire to collect points for free stays impact the business travelers' decision making process?

Frequent travelers, given all the time they spend away from home, might also gravitate to a brand that they feel comfortable with, and know will take care of them while they are on the road. In fact, the impact of this feeling of loyalty to a particular brand is well researched.

Research shows that the more loyal a consumer feels towards their preferred brand, the more they display the outcome behaviors hotels love, like likelihood to recommend, likelihood to return, and increased share of wallet. We wondered if these feelings of loyalty might also cause them to react differently during the decision making process, impacting their reaction to the price and non-price information they have access to while making a booking.

The Study

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.