The Influence of Hotel Price on Perceived Service Quality and Value in e-tourism

KEYWORDS:  online reviews; price effects; perceived quality; perceived value

There has been significant interest among tourism and hospitality researchers 

in the impact of price on customers’ postpurchase perceptions and satisfaction 

(Beldona & Kwansa, 2008; Dreze & Nunes, 2004; Heo & Lee, 2011; Lockyer, 

2005; Nusair, Yoon, & Parsa, 2010). Such work generally shows that price not 

only influences customers’ prepurchase perceptions but also their postpurchase 

satisfaction. With the rapid development of the Internet, e-tourism is now being 

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24    JOURNAL OF HOSPITALITY & TOURISM RESEARCH

used by more travelers. Unfortunately, the influence of price on postpurchase 

perceptions in the Internet environment, particularly in the context of online 

reviews, remains largely unknown.

With the development of e-commerce, the global online retail sector earned 

revenues totaling $434.6 billion in 2010, representing a compounded annual 

growth rate of 16.3% since 2006 (MarketLine, 2011). According to a survey 

conducted by the Keller Fay Group, more than 90% of online shoppers reported 

that they had written online reviews (Bazaarvoice, 2007). These reviews pro-

vide a vital source of authentic content; they express reviewers’ emotions, 

describe their real experiences, and offer recommendations as an enhancement 

to seller-provided information about products and services. They also provide 

important information about online shoppers’ postpurchase perceptions. Studies 

show that online reviews may reflect a more accurate perception of the quality 

of a product or service and customers’ satisfaction with it (Koh, Hu, & Clemons, 

2010; Vermeulen & Seegers, 2009; Zhang, Ye, Law, & Li, 2010).

The rapid development of review systems on the Internet thus provides a 

good opportunity for researchers to investigate the relationship between price 

and postpurchase perceptions in the online context. Usually, customers post 

reviews that combine their perceptions of both quality and value. In other 

words, they incorporate the trade-off between quality and price into their rat-

ings. Previous research has not yet identified the effect of price on such reviews. 

As such, there remains a gap in our knowledge about the relationship between 

price and perceived service quality as well as perceived value in the online set-

ting. Accordingly, this study sets out to empirically investigate the impact of 

price on customers’ perceptions of quality and value in an online context, with 

a particular focus on traveler options from online reviews; it also discusses 

whether star rating and trip type moderate this relationship. The focus is mainly 

on the following research questions:

1.  Does price affect customers’ ratings of perceived quality and value for hotels?

2.  How do hotel star rating and the purpose of travel (business or leisure) moderate 

any such impact of price on perceived quality and value?

The rest of this article is organized as follows. In the next section, we review 

the relevant literature. We then develop our research methodology and the 

results of the empirical testing of our model using online traveler reviews from 

daodao.com. In the final section, we discuss the implications for managers in 

the hotel industry and conclude by setting out the limitations of this study 

together with topics for future research.