How does hotel design contribute to property performance?

Abstract

Purpose

The purpose of this paper is to test the relationships between a hotel’s design quality and the property’s business performance.

Design/methodology/approach

Hotel guests’ assessments of the design quality of hotels that they recently visited are tested using the design quality indicator (DQI). Business performance is measured using indexed values for each property’s occupancy, average daily rate (ADR) and revenue per available room (RevPAR). The data are analyzed using exploratory factor analysis and a variation of a hedonic pricing model.

Findings

Factor analysis reduced the DQI instrument to 19 measurement items. Factors that measure navigability and signage positively impact occupancy index. Factors that measure flexible space usage negatively impact the RevPAR and ADR indices. Factors that reflect aesthetic constructs, including Urban & Social Integration and Character & Form, positively impact the RevPAR and ADR indices.

Research limitations/implications

The study examines a nationwide sample of guests from two full-service brands of a single multi-brand hotel company. The study provides a parsimonious, validated design measurement instrument and a revised hedonic pricing analysis.

Practical implications

Hoteliers can use this technique to assist with resource allocation decisions. Aesthetic elements, including the building’s Urban & Social Integration with its surroundings and its Character & Form, lead to higher ADR and RevPAR performance. Managers should ensure a coherent layout and good signage program to drive occupancy.

Originality/value

This study offers a technique to measure design quality and a new method of performing a hedonic pricing analysis.

Citation

Zemke, D.M.V., Raab, C. and Wu, K. (2018), "How does hotel design contribute to property performance?", International Journal of Contemporary Hospitality Management, Vol. 30 No. 2, pp. 919-938. https://doi.org/10.1108/IJCHM-06-2016-0330