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

Figure 1

A Customer’s Review of Hilton Beijing on daodao.com

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28    JOURNAL OF HOSPITALITY & TOURISM RESEARCH

Here, quality-orientated ratings  mean  the service quality scores posted by 

reviewers. Value-orientated ratings denote service value scores, including value 

for money, which in the context of the service industry can be considered to 

involve a trade-off between quality and price (Bolton & Drew, 1991). It is clear 

that customers making a rating are likely to consider whether the price they 

have paid matches the service quality and facilities they have experienced.

Garcia-Acebron et al. (2010), Korda and Snoj (2007), as well as Lu and Feng 

(2009) all show that perceived price has both direct and indirect effects on per-

ceived product value. Li and Hitt (2010) also find that price has a negative 

impact on the value ratings in online product reviews. Grewal, Gotlieb, and 

Marmorstein (2000) and Cui et al. (2009) find that price has a positive impact 

on perceived quality. It can therefore be assumed that customers will take price 

into account when they post reviews to rating systems and that this will influ-

ence their perception of service quality as well as value.

Based on the above analysis, two hypotheses are proposed as follows:

Hypothesis 1: The price paid by travelers has a negative effect on perceived value.

Hypothesis 2: The price paid by travelers has a positive effect on perceived quality.

Market segmentation is typically driven by an industry’s desire to tailor its offer-

ings more effectively to the heterogeneous demands of customers (Oh & Jeong, 

2010). In hospitality research, hotels are usually segmented according to the quality 

and quantity of the services and facilities they offer to customers; these are usually 

reflected in terms of star ratings. There is no question that a four- or five-star hotel 

will usually be more luxurious and expensive than a one- or two-star establishment 

in the same location (Guillet & Law, 2010). As star rating goes up, travelers form 

different perceptions of service levels. Previous research tends to focus on a specific 

lodging segment (Espinet, Saez, Coenders, & Fluvià, 2003; Mohsin & Lockyer, 

2010) or a comparison of findings across such segments (Oh & Jeong, 2010), indi-

cating that the relationship between satisfaction or perceptions and hotel perfor-

mance varies across different star categories. In this article, we assume that the 

impact of price will be different for hotels with different star ratings, hence:

Hypothesis 3a: Hotel star rating moderates the impact of price on perceived quality 

in an online context.

Hypothesis 3b: Hotel star rating moderates the impact of price on perceived value in 

an online context.

Furthermore, many studies compare business and leisure travelers, tending 

to show that hotel attributes have a different effect on the selections made by 

each group (Ananth, DeMicco, Moreo, & Howey, 1992; Clow, Garretson, & 

Kurtz, 1994; Knutson, 1988). Tat and Raymond (1999) compare the perceptions 

of business and leisure travelers regarding the importance and performance of 

hotel selection factors in Hong Kong. We therefore assume that the impact of 

price on perceived quality and value will be influenced by the type of trip travel-

ers are taking. Thus, we hypothesize the following:

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Ye et al. / INFLUENCE OF HOTEL PRICE ON PERCEIVED SERVICE QUALITY  29

Hypothesis 4a: A traveler’s trip type (business or leisure) moderates the impact of 

price on perceived quality in an online context.

Hypothesis 4b: A traveler’s trip type (business or leisure) moderates the impact of 

price on perceived value in an online context.