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The Effect of Loyalty Program Attributes on Customer's Booking Purdue University Purdue e-Pubs Open Access Theses Theses and Dissertations Summer 2014 The ffecE t of Loyalty Program Attributes on Customer’s Booking Choice Sung Jun Joe Purdue University Follow this and additional works at: https://docs.lib.purdue.edu/open_access_theses Part of the Business Administration, Management, and Operations Commons Recommended Citation Joe, Sung Jun, "The Effect of Loyalty Program Attributes on Customer’s Booking Choice" (2014). Open Access Theses. 471. https://docs.lib.purdue.edu/open_access_theses/471 This document has been made available through Purdue e-Pubs, a service of the Purdue University Libraries. Please contact [email protected] for additional information. i THE EFFECT OF LOYALTY PROGRAM ATTRIBUTES ON CUSTOMER’S BOOKING CHOICE A Thesis Submitted to the Faculty of Purdue University by Sung Jun Joe In Partial Fulfillment of the Requirements for the Degree of Master of Science i August 2014 Purdue University West Lafayette, Indiana ii To my loving family and friends 사랑하는 가족과 친구들에게 ii iii ACKNOWLEDGEMENTS I thank God for giving me the strength and abilities to accomplish this thesis. I would like to express my deep gratitude and appreciation to my major professor Dr. Chun-Hung (Hugo) Tang for his guidance and support in preparation of this thesis. I would also like to thank my committee members Dr. Xinran Lehto and Dr. Joseph (Mick) La Lopa for their assistance during this process. I genuinely appreciate my parents for their love and support. I would also like to thank my grandparents and uncles for their unconditional love, encouragement, and support. iii iv TABLE OF CONTENTS Page LIST OF TABLES ............................................................................................................ vii LIST OF FIGURES ......................................................................................................... viii ABSTRACT .................................................................................................................... ix CHAPTER 1. INTRODUCTION ...................................................................................... 1 1.1 Study Background ............................................................................................... 1 1.2 Increased importance of loyalty programs .......................................................... 3 1.3 Objectives of the Study ....................................................................................... 5 1.4 Contribution of the study .................................................................................... 6 1.5 Organization ........................................................................................................ 8 CHAPTER 2. LITERATURE REVIEW ......................................................................... 10 2.1 Consumer Online Booking Behavior ................................................................ 10 2.1.1 Determinants of Online Shopping .................................................................11 2.1.2 Determinants of Online Booking ...................................................................13 iv 2.2 Hotel Online Distribution Channel ................................................................... 15 2.2.1 Overview of Current Status ...........................................................................15 2.2.2 Direct vs. Third Party Channels ....................................................................16 2.3 Loyalty Program ............................................................................................... 19 2.3.1 Classification of Loyalty Program Rewards ..................................................20 v Page 2.4 Hypotheses development .................................................................................. 21 CHAPTER 3. METHODS ............................................................................................... 25 3.1 Procedures ......................................................................................................... 25 3.2 Procedures of Investigating the Current Rewards Offered ............................... 26 3.3 Methodology for consumer survey and choice based conjoint analysis ........... 26 3.3.1 Survey Design ................................................................................................26 3.3.1.1 Sample and data collection .................................................................... 26 3.3.1.2 Travel and Online Booking Information ................................................ 27 3.3.1.3 Hotel Loyalty Program Experience ....................................................... 28 3.3.1.4 Hotel booking scenario .......................................................................... 29 3.3.1.5 Choice-based conjoint questions ............................................................ 30 3.3.2 Data Analysis .................................................................................................33 3.3.2.1 Descriptive Statistics .............................................................................. 33 3.3.2.2 Conjoint Analysis .................................................................................. 34 v 3.3.2.3 Hypotheses Testing ................................................................................ 36 CHAPTER 4. RESULTS ................................................................................................. 38 4.1 Rewards Offered by Hotels and OTAs ............................................................. 38 4.2 Descriptive Statistics ......................................................................................... 46 4.2.1 Profile of Respondents ...................................................................................46 4.2.2 Travel and Online Booking Experience ........................................................48 4.2.3 Hotel Loyalty Program Experience of Participants .......................................48 vi Page 4.3 Hypotheses Testing ........................................................................................... 51 4.4 4.5 Results of Conjoint Analysis ................................................................... 54 4.4.1 Partial Utility Scores ......................................................................................54 4.4.2 Attribute Importance ......................................................................................55 4.4.3 Market simulations ........................................................................................61 4.4.3.1 When the Room Rate of Current Hotel Product is Reduced ................. 62 4.4.3.2 When Hotels Offer Immediate Redemption .......................................... 63 4.4.3.3 When Hotels Offer Unrelated Rewards ................................................. 65 CHAPTER 5. CONCLUSION ......................................................................................... 68 5.1 Discussions on Key Findings ............................................................................ 68 5.2 Theoretical Implication ..................................................................................... 69 5.3 Managerial Implication ..................................................................................... 72 5.4 Limitations of the Study.................................................................................... 76 LIST OF REFERENCES .................................................................................................. 78 vi APPENDIX ................................................................................................................... 92 vii LIST OF TABLES Table .............................................................................................................................. Page Table 4.1 Reward Classifications of Hilton HHonors ...................................................... 39 Table 4.2 Reward Classifications of Marriott Rewards .................................................... 40 Table 4.3 Reward Classifications of IHG Rewards Club ................................................. 42 Table 4.4 Reward Classifications of Hyatt Gold Passport ................................................ 43 Table 4.5 Reward Classifications of Starwood Preferred Guest ....................................... 44 Table 4.6 Reward Classifications of OTA Rewards Programs ......................................... 45 Table 4.7 Profile of Respondents Sample ......................................................................... 47 Table 4.8 Travel Information of Respondents Sample ..................................................... 50 Table 4.9 Results of Logistic Regression: Effect of Attributes on Channel Selection ..... 52 Table 4.10 Results of Logistic Regression: Effect of Involvement .................................. 53 Table 4.11 Partial Utility Scores ....................................................................................... 55 Table 4.12 Relative Importance Values ............................................................................ 57 Table 4.13 Relative Importance Scores with Different Demographics ............................ 59 vii Table 4.14 Relative Importance Scores with Different Travel Characteristics ................ 60 Table 4.15 Base Scenario for Hotel and OTA Products ................................................... 62 viii LIST OF FIGURES Figure ............................................................................................................................
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