Critical Success Factors And Customer Expectation In Budget Hotel Segment

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This study examined the CSFs in China’s budget hotel operations and development from the perspectives of various stakeholders, namely, the customer, the industry professional, the government authority, and the hotel investor. Interviews were conducted to gain a deeper understanding of the industry professional, government authority and hotel investor. Questionnaires were utilized used to determine customer expectations.

Although the main theme of budget hotels is monetary value for accommodation, hotel guests still considered service quality as the primary factor when they chose where to stay. Price was no longer a decisive factor among guests who would choose and could afford to stay at the budget hotel.

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This study also supported the notion that Chinese hotel guests prefer quality service, attention, and respect. Enhancement of service quality may result in more repeat and loyal customers. An interesting finding of CSFs recognition pattern is that the customer considered customer service as the most important constituent, and the industry professional was also very customer-oriented, with a focus on speed of service and hygiene and cleanliness.

By contrast, the hotel investor focused on organization, with no strong desire for customer service. The government authority stood somewhere between the industry professional and the hotel investor with respect to customer service. A customer service orientation continuum among different stakeholders is illustrated. Five dimensions from 35 CSFs were derived from this study. They were service quality, location, promotion, price and physical products, ranked in a descending order of importance from the customer expectation. Both physical location (city and district in the city) and virtual location (hotel reservation network) were rated critical by the customer aside from service quality, implying that convenience is another criterion for guests to choose budget hotels in China. Promotion, price, and physical products were not deemed as important as service quality and location.

As the economy hotel sector appeared less than a decade ago in China, a timely and appropriately standardization of the service quality in China’s budget hotels is still an urgent concern for the expansion of the industry. Total quality management could be a solution for the budget hotels. Furthermore, budget hotels in China should pay more attention to their physical and virtual locations in response to the needs of their guests. For newly planned economy hotels, they should place more important on physical location than on the facility itself.

Both existing and newly planned budget hotels may consider an affiliation with online marketing consortiums such as or or become franchised to better utilize hotel reservation network systems, improving the quality of virtual location.

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