1

The Price of Heritage: An Investigation of Hotel Prices

Abstract

This paper investigates the price premium charged by hotels to heritage tourists. A

field study shows that heritage hotels in India command a sizable price premium over

comparable, conventional hotels in India. Another field study finds that hotel rooms

facing the Niagara Falls, USA, are more expensive than hotel rooms facing the city. A

third study investigates the preferences of heritage tourists visiting India to see the

Taj-Mahal. The study finds that heritage tourists indicate higher quality perception,

purchase intentions, word-of-mouth likelihood and willingness-to-pay for a hotel

room with an ethnic room decor and overlooking the Taj-Mahal compared to a hotel

room with a modern decor and overlooking the city. Overall, this paper demonstrates a

significant "price of heritage".

Keywords: Heritage, Pricing, Hotels, Service

1. Introduction

Heritage tourism refers to “tourism centered on what we have inherited” from the past

(Ivanov, 2014; Yale 1991). Heritage tourism may be centered on travel to experience nature

(e.g. Niagara Falls, USA) or culture (e.g. Taj-Mahal, India). Many businesses and industries

such as hotels, restaurants, flourish under the umbrella of heritage tourism. In this regard,

suitably pricing hotel rooms and related services for heritage tourists becomes a crucial

issue. This is because a hotel’s price reflects an assessment of the value that heritage tourists

see and their willingness-to-pay for the hotel’s rooms and services.

This paper addresses the following issues concerning the “price of heritage” with

respect to the hotel industry engaged in heritage tourism. The first issue concerns the pricing

strategies employed by hotels serving heritage tourists. In this paper, we have investigated

2

whether the hotel industry charges heritage tourists a price premium? We have evaluated

whether hotels extract a “price of heritage” by charging higher prices for hotel rooms in

heritage settings, compared to conventional hotel rooms?

The second issue concerns consumer perceptions and willingness-to-pay for hotel

rooms in heritage versus conventional settings. In this paper, we have also investigated

whether heritage tourists have greater quality perceptions, purchase intentions and

willingness-to-pay for hotel rooms? We have analyzed these research questions with the

help of two field studies and one laboratory study.

Our first field study empirically investigated the pricing of hotel rooms in heritage

hotels located in the Indian state of Rajasthan. Rajasthan is well known for its rich cultural

heritage. Many palaces and forts built by erstwhile Rajput rulers have been converted into

hotels and are managed by modern five-star hotel chains (e.g. The Oberoi Raj Vilas, Jaipur,

India http://www.oberoihotels.com/oberoi_rajvilas/). These hotel chains also manage

conventional five-star hotels (e.g. The Oberoi, Bangalore). We empirically analyzed the

hotel prices set by heritage hotels in contrast to otherwise comparable, conventional hotels.

We estimated a regression of hotel room prices in a mixed-model framework. Our model

accounted for both fixed-effects and random-effects, controlled for unobserved

heterogeneity, and was estimated using the Restricted Maximum Likelihood (REML)

methodology. Our analysis revealed a significant “price of heritage” embedded in hotel

room rent among heritage hotels in Rajasthan, India.

Our second field study concerned hotel prices at Niagara Falls, located at the

American - Canadian border in North America. The world-renowned Niagara Falls reflect

3

nature at its very best. They represent an icon of North America’s rich natural heritage

(http://niagarafallstourism.com/). The falls encompass breath-taking views from the

Canadian side as well as the American side. In this study, we compared the prices of hotel

rooms at the Hilton Embassy Suites (http://www.embassysuitesniagara.com/). Strategically

located, this hotel offers heritage tourists hotel rooms with three possible views from the

room window – 1) A view of both Canadian and American Falls; 2) A view of the Canadian

Falls only; 3) No view of the falls. This setting provided us an excellent platform for

measuring the “price of heritage”. We empirically studied how the view from the room

influenced the room prices. Our regression analysis revealed that the Hilton priced rooms

with otherwise practically identical interiors differently, depending on the heritage view.

Rooms with no view were the cheapest ($187); rooms offering the Canadian-side view of

the Niagara Falls only were relatively more expensive ($213), while rooms whose windows

displayed both the American and Canadian-side view of the Niagara Falls were

comparatively the most expensive ($238). Once again, analysis of hotel room prices

indicated a significant “price of heritage” built into the room rent charged by the Hilton.

Our Niagara Falls field study differed from our Rajasthan, India field study in at

least two meaningful, supplementary ways, even though both dealt with hotel prices. First

and foremost, recall that Yale (1991) explains that heritage tourism may be to either

experience nature or culture. The two studies focused on these two aspects of heritage

tourism respectively. While our Rajasthan, India hotel study emphasized heritage tourism to

experience history and culture, our Niagara Falls hotel study presented an ideal setting to

analyze heritage tourism to experience nature. Secondly, the two field studies jointly

spanned vastly different geographies – Niagara Falls in North America and Rajasthan in

4

India, Asia. This geographic diversity enhanced the external validity of our central finding

regarding the “price of heritage”.

Our third study was an experimental survey. It concerned the hotel room preferences

of heritage tourists visiting Agra, India to see the Taj-Mahal. Built in the 17th century by the

Mughal emperor, Shah Jahan, the Taj-Mahal is a UNESCO World Heritage site

(http://whc.unesco.org/en/list/252). We explored heritage tourists’ perceptions of hotel room

quality, their likelihood of renting a hotel room, their willingness-to-pay room rent and their

likelihood of promoting a heritage hotel with positive word-of mouth. The between-subjects

survey manipulated whether the room view was conventional or whether the hotel room

balcony overlooked the Taj-Mahal, thus reflecting India’s rich cultural heritage. The survey

additionally manipulated whether the interior décor of the room was modern or whether it

was ethnic, Indian. We held all else constant across the four conditions. A standard two-way

ANOVA analysis proved insightful. We found that heritage tourists visiting Agra expressed

significantly higher quality perceptions, greater purchase likelihood, higher willingness-to-

pay and greater propensity to word-of-mouth publicity when the room overlooked the Taj-

Mahal, compared to when the view was conventional. We also found qualitatively similar

results when the room had ethnic interior décor, compared to modern décor.

These three studies offered managerial implication and research contribution. The

Taj-Mahal laboratory study suggested that tourists exhibit a greater willingness-to-pay for

hotel rooms in a heritage setting, arising from higher quality perceptions and greater

purchase intentions. The complementary Rajasthan heritage hotels study and the Niagara

Falls study offered field evidence in support of hotels charging heritage tourists a price

premium. Jointly, these studies reflected the “price of heritage” issue studied in this paper.

5

2. Literature Review

This paper is related to three streams of research – the literature on heritage tourism, hotel

pricing and the prior research on hedonic pricing. We review each strain of research in turn.

Heritage Tourism: Our heritage references our “legacy from the past”. It is what we have

inherited from our past and what we will pass on to the next generation. Our heritage – both

cultural and natural – represents an unredeemable reservoir of life and inspiration

(UNESCO).

Heritage tourism is defined as “visits by persons from outside the host community

motivated wholly or in part by interest in historical, artistic, scientific or lifestyle/heritage

offerings of a community, region, group or institution” (Silberberg 1995). For example,

millions of tourists flock to see the Niagara Falls in USA. Similarly, millions of tourists visit

Agra, India to view the Taj-Mahal, one of the Seven Wonders of the World. Heritage

tourism can be thought as “tourism centered on what we have inherited” (Yale 1991). This

can include historic buildings such as the Taj-Mahal or beautiful scenery such as the

Niagara Falls. Similarly, the National Trust for Historic Preservation in the United States

defines heritage tourism as "traveling to experience the places, artefacts and activities that

authentically represent the stories and people of the past". Government agencies such as

UNESCO’s World Heritage Center (http://whc.unesco.org/) have indicated heritage and

cultural tourism to be a significant method of regional economic development. Heritage

tourism is a source of active economic growth with relatively less investment (Strauss &

Lord 2001, Bridaa et al 2012; Huang et al. 2012). The money that it generates indirectly

helps preserve the cultural heritage and also provides financial assistance for marketing and

6

promotion. Moreover, it also promotes harmony among diverse groups of people, which in

turn helps renew tourism (Richards 1996). Our paper adds to this body of knowledge. We

investigate the extent to which hotels located at heritage sites are able to command higher

prices and generate greater revenue than hotels at conventional locations.

Pricing in the hotel industry: Our research is closely related to the prior work on pricing in

the hotel industry. Previous research has established the crucial impact of strategic pricing in

the hotel industry. Selecting a hotel room is crucially influenced by price (Hung, Shang, &

Wang, 2010; Lockyer, 2005). Yet, scholars have also made the pertinent point that price

planning is a potentially overlooked and under-studied area of research (Hoffman, Turley, &

Kelley, 2002; Rowley, 1997). A variety of factors and attributes such as the hotel location,

the service quality, the reputation of the establishment, the perceived levels of cleanliness

and security and so on, have been shown to impact consumer choice (Chu & Choi, 2000).

Similarly, prior research has evaluated the role of a large number of variables driving the

prices of hotel rooms such as the brand equity of the hotel, the hotel category and size, the

availability of restaurants, the location of the hotel relative to prominent landmarks such as

the city center, the amenities inside the hotel rooms, the availability of parking and

recreation facilities etcetera (Wu, 1999, Espinet et al., 2003). It is worth noting that any

unique feature or combination of features that is strongly significant for at least one set of

consumers can be potentially used as a basis for segmentation, targeting and positioning

segmentation (Dubé & Renaghan, 2000). In the light of the varied features on which hotels

could build their differentiation, our research focuses on how the location of the hotel

(Study 1); view from the hotel room (Studies 2 and 3) and décor of the hotel room (Study 3)

influence hotel prices paid by heritage tourists.

7

Heritage tourism includes two elements of heritage corresponding to nature and culture.

Therefore, we have selected two corresponding factors of heritage in this paper – the view

from the window of a hotel room (Study 2 and 3) and the interior décor of the hotel room

(Study 1 and 3). Indeed, prior research conducted across a variety of industries, has found a

positive correlation between differentiation and prices (Mazzeo 2002; Poria, 2013) and

enhanced market power (Dranove et al 2003). Therefore, we expect a positive correlation

between heritage and quality perceptions of hotel rooms and greater willingness-to-pay.

Hedonic Pricing and tourism: Finally, our research is also relevant to prior work on

hedonic pricing in the tourism context. A firm’s ability to price a tourism-related product or

service is crucially driven by consumers’ expected hedonic value of the experience. This is

consistent with the foundation of hedonic pricing theory. Early research in this domain

(Nuryanti, 1996; Rossen 1974) has established that the “valuation for a product or service

stems from their utility-bearing attributes”. Hedonic price analysis permits firms to analyze

different attributes valued by consumers. This influences the marketing programs designed

by firms to maximize revenue and sales and successfully target tourists. A few research

efforts have analyzed tourism from the perspective of hedonic pricing. For example, Clewer

et al (1992) measured the price competitiveness of inclusive holiday tours in Western

Europe; Sinclair et al (1990) analyze the hedonic pricing strategy of tourist resorts in

Malaga, Spain; Papatheodorou (2002) studies pricing at Mediterranean resorts. Similarly,

Espinet et al (2003), Yang et al. (2010) also study hedonic pricing in tourism context.

Our research adds to this stream of research. We study hedonic pricing of hotels in both

India and North America. We empirically characterize the hedonic price premium charged

by hotels located at heritage sites, relative to hotels at non-heritage related locations. We

8

also account for the hedonic influence of traditional room décor on consumers’ willingness-

to-pay for a hotel room at a heritage site.

3. Study 1 – An empirical field study of heritage hotel prices in India

Many heritage sites get converted into managed hotel properties. The objective of this study

was to compare the pricing strategy employed at hotels located at heritage sites with the

pricing strategy employed at conventional hotels.

3.1 Hypothesis

We study how the price of a room at a hotel located in a heritage site differs from the price

at a modern, contemporary hotel. If there is a “price of heritage”, we expect that, the hotel

room rate at heritage sites will be more than that at modern hotels, holding all else constant.

We believe that consumers are asked to pay a price-premium for the pleasure of staying in a

heritage property and experiencing the splendor and romance of the past. Therefore, we

make the following hypothesis.

H1: The average prices of hotel rooms at heritage sites are higher than the prices at

modern hotels.

3.2 Data

The state of Rajasthan in India is well-known for its rich cultural heritage, with many forts

and palaces. Many traditional palaces and forts have been converted into hotels, often

managed by hotel chains.

For example, consider The Oberoi Rajvilas, located in Jaipur, India. This is a heritage site,

built in a traditional Rajasthani fort style. It was converted into a hotel, managed by the

9

Oberoi Group. (Figure 1) It has a Rajasthani haveli (mansion) and a 280 year old Shiva

temple on the premises. The gold-leaf, hand-painted wall murals, the colorful Indian

miniature paintings and the old armory mounted on the walls, all add to the quintessentially

traditional feel of the fort. The rooms in this hotel are priced in the range Rupees 22,000–

32,900 per night (US $368 - $550). In contrast, consider the Oberoi hotel located in

Bangalore, India. It is situated on MG Road, in the heart of the business, financial and

shopping districts of Bangalore. It is an ideal venue for conferences and meetings. (Figure 2)

It is interesting to note that despite Bangalore being a significantly more expensive city than

Jaipur, the rooms in this hotel are priced in the range Rupees 12,500 – 18,000 per night (US

$210 - $302). These two hotels indicate a price premium for “heritage” among Indian hotels.

The aim of this research is to study this aspect with empirical rigor.

<Insert Figure 1 and 2>

For this project, our dataset is based on hotels located in four Indian cities (Jodhpur, Jaipur,

Udaipur, Jaisalmer) in the state of Rajasthan, similar to the hotels mentioned in the above

examples. The cities have hotels located in traditional, heritage sites, as well as conventional

modern hotels. We collected data from www.MakeMyTrip.com that aggregates hotel

availability, room prices and features.

City: It is likely that the city in which a hotel is located in will strongly influence the hotel

room prices. We used a dummy variable 𝐶𝑖𝑡𝑦𝑗 to index the cities Jodhpur, Jaipur, Udaipur,

Jaisalmer, where 𝑗 ∈ {0,1,2,3}, respectively. We also indexed the hotels as 𝑘 ∈ {0,1,2, . . }.

Accordingly, the subscript 𝑗𝑘 was used to refer to hotel 𝑘 in city 𝑗.

10

Heritage: We used a dummy variable 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑗𝑘 to indicate whether a hotel was a

heritage hotel. 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑗𝑘 = 1 indicated a heritage hotel (e.g. The Oberoi Rajvilas, Jaipur),

while 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑗𝑘 = 0 indicated a modern hotel. We marked a hotel as modern, if the

location and construction was unrelated to India's cultural heritage (e.g. The Oberoi,

Bangalore).

Price: We collected data in May 2014. We used 𝑃𝑟𝑖𝑐𝑒𝑗𝑘 to denote the average price of a

room at a hotel. We measured 𝑃𝑟𝑖𝑐𝑒𝑗𝑘, as the average of the most expensive and least

expensive room at hotel 𝑘 in city 𝑗.

Star Rating: Hotel ratings are often used to classify hotels according to their quality using a

star rating, ranging from one to five star. It has a direct correlation with the price of a room.

Therefore, it is important to control for price variation because of the star rating. We used

the variable 𝑆𝑡𝑎𝑟𝑗𝑘 denoted the star rating of hotel 𝑘 in city 𝑗.

Rooms: We recorded the total number or rooms in hotel 𝑘 in city 𝑗 as 𝑅𝑜𝑜𝑚𝑠𝑗𝑘. We used it

as a control variable to account for the possibility that the room price set by a hotel may

depend upon the supply of available rooms.

Distance from the Airport and Railway Station: It is possible that hotels located close to

the airport are able to charge a price premium for the greater convenience and easy access.

In order to control for this alternate explanation, we recorded the distance between a given

hotel and the closest airport and station. We used the variables 𝐴𝑖𝑟𝑝𝑜𝑟𝑡𝑗𝑘 and 𝑆𝑡𝑎𝑡𝑖𝑜𝑛𝑗𝑘 to

denote the distance of hotel 𝑘 in city 𝑗 from the closest airport and train station respectively.

11

Bar and Business Center: The amenities and facilities provided within a hotel can also

potentially influence the price of a room. To partially control for such factors, we recorded

whether a hotel had a bar and whether it had a business center. We used 𝐵𝑎𝑟𝑗𝑘 to denote the

presence or absence of a bar at hotel 𝑘 in city 𝑗. Similarly, we used 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠𝐶𝑒𝑛𝑡𝑒𝑟𝑗𝑘 to

denote the presence or absence of a business center at hotel 𝑘 in city 𝑗. Table 1 shows the

summary statistics.

<Insert Table 1>

3.3 Model

We analyzed the research question using three nested models.

Model 1: We first established the effect of heritage on the price of a room in a hotel with

the simplest model we could come up with. We regressed the price on the dummy variable

for whether a hotel was a heritage hotel, as follows.

𝑃𝑟𝑖𝑐𝑒𝑗𝑘 = 𝛼0 + 𝛼1 ∗ 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑗𝑘+∈ (1)

We estimate Model 1, using linear least squares. If there was a “price of heritage” in the

market, we expected to find 𝛼1>0 in support of hypotheses H1.

Model 2: Next, as a robustness check, we defined a detailed model accounting for seven

additional independent variables, which may also influence the variation in hotel prices. Our

revised regression model was as follows.

𝑃𝑟𝑖𝑐𝑒𝑗𝑘 = 𝛼0 + 𝛼1 ∗ 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑗𝑘 + 𝛼2 ∗ 𝐶𝑖𝑡𝑦𝑗 + 𝛼3 ∗ 𝑆𝑡𝑎𝑟𝑗𝑘 + 𝛼4 ∗ 𝑅𝑜𝑜𝑚𝑠𝑗𝑘

+ 𝛼5 ∗ 𝐴𝑖𝑟𝑝𝑜𝑟𝑡𝑗𝑘 + 𝛼6 ∗ 𝑆𝑡𝑎𝑡𝑖𝑜𝑛𝑗𝑘 + 𝛼7 ∗ 𝐵𝑎𝑟𝑗𝑘 + 𝛼8 ∗ 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠𝐶𝑒𝑛𝑡𝑒𝑟𝑗𝑘+∈

12

(2)

We estimated Model 2, described in (2) using linear least squares. Once again, if there was

indeed a “price of heritage” in the hotel market, we expected to find 𝛼1>0 in support of

hypotheses H1.

The value of rerunning the regression with the seven additional independent variables was

that we anticipated that doing so would fit the data better. Recall that the Akaike

Information Criterion (AIC) developed by Akaike (1974) and the Bayesian Information

Criterion (BIC) developed by Schwarz (1978), represent the trade-off between the goodness

of fit of the model and the complexity of the model. If Model 2 indeed fit the data better

than Model 1, we expected the AIC and BIC of Model 2 to be less than Model 1.

Another benefit of having the seven additional regressors outlined in Model 2 was that it

helped us rule out some alternate explanations for the variation in hotel prices. For example,

it is well-known that five-star hotels are more expensive than four star hotels. Including the

star rating as a regressor, permitted us to investigate the effect of heritage on hotel pricing,

after control for price variation due to the star rating. We expected to find the coefficient for

𝑆𝑡𝑎𝑟𝑗𝑘 to be positive(𝛼3>0). Similarly, having a dummy variable for each city, permitted us

to control for city-wide variation in prices of hotel rooms, potentially arising out of

differences in real-estate prices and other expenses across cities.

Model 3: Next, we estimated the model in (2) using a mixed-models framework. In general,

mixed models are a type of hierarchical linear models. They assist in controlling for

unobserved heterogeneity and correlations between independent variables. The method of

Ordinary Least Squares makes the limiting assumption that the independent variables are

13

uncorrelated. When we constructed the variance-covariance matrix of the independent

variables in equation (2), we observed that the variables were correlated. To overcome this

limitation in OLS estimation, we analyzed the problem in a mixed-models framework. Such

a model-framework accounted for both fixed effects and random effects in the data.

Fixed Effects: We estimated the following independent variables as fixed effects:𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑗𝑘,

𝑆𝑡𝑎𝑟𝑗𝑘, 𝐵𝑎𝑟𝑗𝑘 , 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠𝐶𝑒𝑛𝑡𝑒𝑟𝑗𝑘.

Random Effects: We estimated the remaining following variables as random effects:𝐶𝑖𝑡𝑦𝑗,

𝑅𝑜𝑜𝑚𝑠𝑗𝑘, 𝐴𝑖𝑟𝑝𝑜𝑟𝑡𝑗𝑘 and 𝑆𝑡𝑎𝑡𝑖𝑜𝑛𝑗𝑘.

These variables were modeled as random effects for two reasons. First, for some variables,

it was difficult to predict whether the hotel prices would increase or decrease with a positive

change in these variables. For example, we estimated 𝐶𝑖𝑡𝑦𝑗 as a random effect because we

could not say whether hotels in one city (e.g. Jaisalmer) should be more or less expensive

than the hotels in another city (e.g. Jodhpur). Estimating 𝐶𝑖𝑡𝑦𝑗 as a random effect accounted

for the impact of each city individually. Similarly, we modeled 𝑅𝑜𝑜𝑚𝑠𝑗𝑘as a random effect,

since it was hard to predict the impact of the number of rooms in a hotel on the room price

set by the hotel.

The second reason why we modeled some variables as random effects was that a

quantifiable range for these variables was not clearly known. For example, the distance

between a hotel and the airport / railway station did not have an upper-bound. Therefore, it

made sense to model 𝐴𝑖𝑟𝑝𝑜𝑟𝑡𝑗𝑘 and 𝑆𝑡𝑎𝑡𝑖𝑜𝑛𝑗𝑘 as random effects.

14

We estimated the mixed-effect regression model using the Restricted Maximum Likelihood

(REML) estimation method. As Smyth and Verbyla (1996) explain, REML estimators are

obtained, not from maximizing the complete likelihood function, but from maximizing only

the part invariant to the fixed effects in the linear model. REML estimators take into account

the loss of degrees of freedom in estimating the mean and therefore, produce unbiased

estimators for the variance parameters (Smyth and Verbyla 1996).

3.4 Results

Model 1: We found empirical support for H1. The average room prices at heritage hotels

were higher than the prices at modern hotels. The regression analysis using Ordinary Least

Squares yielded 𝛼1>0, with p < 0.01, as shown in Table 2.

Model 2: The analysis of Model 2 also yielded statistical support for our hypothesis H1.

Recall that Model 2 extended Model 1, by including seven additional independent variables,

as shown in equation (2). We again found that the average room prices at heritage hotels

were higher than the prices at modern hotels. This regression analysis also yielded 𝛼1>0,

with p <0.01, as shown in Table 2. As expected, we additionally observed a positive

relationship between the average hotel room prices and the hotel star ratings, 𝛼3>0, with p <

0.0001. Model 2 fit the data better than Model 1, as indicated by the AIC. The AIC of

Model 2 was less than the AIC of Model 1.

Model 3: Recall that in Model 3, we estimated equation (2) in a mixed-models framework

with fixed-effects and random-effects using Restricted Maximum Likelihood. Model 3 gave

us the same qualitative results as Model 3. We found yielded 𝛼1>0, with p < 0.01. We also

found, 𝛼3>0, with p < 0.0001. The regression output is summarized in Table 2. The crucial

15

benefit of Model 3 was that it fit the data even better than Model 2. As shown in Table 2, the

AIC in Model 3 was considerably less than the AIC in Model 2.

<Insert Table 2>

4. Study 2 – An empirical field study of Hilton hotel prices at Niagara Falls, USA

4.1 Overview

The objective of this study was to investigate the pricing strategy employed by hotels

located at heritage sites in a different locale. While Study 1 was based on the Indian hotel

industry, this study analyzed hotel prices at Niagara Falls, USA. Our goal was to compare

prices of hotels rooms with a view of the Niagara Falls, with the prices of rooms without a

view.

The Niagara Falls are a collective of three waterfalls, located on the Niagara River at

international border between Canada and the United States. The US Congress designated

Niagara Falls as a National Heritage Place in 2008, for its natural beauty and esthetic

importance. (http://www.nps.gov/nifa/index.htm). It is one of the world’s most visited

tourist heritage places, with more than 22 million tourists per year (http://buffalorising.com).

In this study, we compared the prices of hotel rooms with a ‘heritage view’ with the

prices of hotel rooms without a ‘heritage view’. Taking clues from hedonic pricing theory

(Rossen 1974, Tomkovich and Dobie 1995), we believe that consumers are asked to pay a

price-premium for the pleasure of watching a heritage view from the hotel room. If there is a

price of heritage, we expect that the hotel rooms with heritage views will be priced higher

than the hotel rooms without heritage views, after controlling for other factors. Accordingly,

we construct the following hypothesis:

16

Hypothesis H1a: The average prices of hotel rooms at heritage sites with heritage

views are higher than the prices of comparable hotel rooms without heritage views.

4.2 Data

For this study, we collected data from the Hilton hotel website

(http://www3.hilton.com/en/hotels/ontario/hilton-niagara-falls-fallsview-hotel-and-suites/).

This hotel is situated near Niagara Falls, at the American-Canadian border. It overlooks the

Niagara Falls and provides breath-taking views of the scenic beauty of Niagara Falls. This

hotel has three types of rooms. Some rooms provide both American and Canadian views of

the Niagara Falls, some other rooms provide just the Canadian view of the Niagara Falls,

while the remaining rooms face the city and therefore do not provide any view of the falls.

We expected that a comparison of hotel rooms with different views from the windows,

would explain the extent to which hotels charge price premiums for heritage views.

We focused on hotel rooms that had two queen-sized beds. This type of room was available

with three types of views from the window -- ‘City view’, ‘Canadian view’ and ‘American

and Canadian views’, as shown in Figure 3.The hotel also had other rooms with king-sized

beds and larger suites, which we ignored in order to restrict the scope of our data collection.

<Insert Figure 3>

Seasonality: We collected data on July 15, 2014. We recorded the price of reserving a room

in advance for future dates ranging from July 18, 2014 to Feb 27, 2015. This duration was

224 days or 32 weeks. Hotel rooms at Niagara Falls are expected to be more expensive

during the peak season at Niagara Falls (July – October) compared to the winter off-season

(November – February). Therefore, analyzing prices over 32 weeks helped us characterize

17

the price of heritage, after controlling for price variations due to seasonality and ruling out

this alternate explanation for price dispersion. A hotel room is typically more expensive

during the weekend (e.g. Saturday) compared to the price of the same hotel room during

weekdays (e.g. Wednesday). Indeed, it is quite reasonable that hotels discriminate between

consumers based on whether they rent a room during the week or during the weekend. In

order to accurately measure the “price of heritage” with respect to the view of the Niagara

Falls, it was crucial to control for price variation driven by this factor. Therefore, we

recorded hotel room prices for rooms having the three types of views described above, for

every Wednesday and Saturday, during the July 18, 2014 to Feb 27, 2015, timeframe,

thereby generating 195 data points. We used a dummy variable 𝑊𝑒𝑒𝑘𝑒𝑛𝑑to indicate

whether a posted price corresponded to a weekend Saturday(𝑊𝑒𝑒𝑘𝑒𝑛𝑑 = 1) or a weekday

Wednesday(𝑊𝑒𝑒𝑘𝑒𝑛𝑑 = 0).

Heritage View: We used a dummy variable HeritageView to indicate whether a hotel room

offered a city view (HeritageView =0), or the room provided only a Canadian view of the

falls (HeritageView =1), or the room provided both American and Canadian views of the

Niagara Falls (HeritageView =2). In other words, we classified the views on three levels of

heritage. It was also possible that the price of heritage is higher during the weekend,

compared to a weekday. In order to research this possibility, we accounted for a possible

interaction between𝑊𝑒𝑒𝑘𝑒𝑛𝑑and𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒.

Price: We used the variable Price to indicate the price of a hotel room. The prices ranged

from $135 to $575. The summary statistics for the hotel room prices, broken down by the

type of view on offer, are available in Table 3. As shown in Table 3 and Figure 3, the

average room prices were $187, $213 and $237 for each type of hotel view.

18

<Insert Table 3>

4.3 Model

In order to test Hypothesis 1a, we proposed the following model:

𝑃𝑟𝑖𝑐𝑒 = 𝛼0 + 𝛼1 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑉𝑖𝑒𝑤 + 𝛼2 𝑊𝑒𝑒𝑘𝑒𝑛𝑑 + 𝛼3 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑉𝑖𝑒𝑤 ∗ 𝑊𝑒𝑒𝑘𝑒𝑛𝑑+∈ (3)

We established the effect of heritage view on the price of a hotel room with the simplest

model. We regressed 𝑃𝑟𝑖𝑐𝑒 on 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑉𝑖𝑒𝑤, 𝑊𝑒𝑒𝑘𝑒𝑛𝑑and an interaction between

𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑉𝑖𝑒𝑤 and 𝑊𝑒𝑒𝑘𝑒𝑛𝑑.We estimated model, using linear least squares. If there was

a “price of heritage” in the market, we expected to find the coefficient of 𝐻𝑒𝑟𝑖𝑡𝑎𝑔𝑒𝑉𝑖𝑒𝑤 to

be positive.

4.4 Results

We found empirical support for H1a. The average room price of heritage view (American

and Canadian view) was higher than the prices of hotel room with Canadian view. Similarly

average price for the hotel room with Canadian view was higher than the price of hotel room

with City view. The regression analysis using Ordinary Least Squares yielded 𝛼1>0, with

p<0.05 as shown in Table 4. The average price of hotel room on weekend was also higher

than the price of hotel room on weekdays 𝛼2>0, with p<0.05.

<Insert Table 4>

5. Study 3 – A survey of consumer preferences for heritage hotels

19

Study 1 and Study 2 presented field evidence with external validity. However, they could

not shed light on consumer perceptions and decision making. Study 3 was designed to

address this void.

Recall that in Study 1, we found that hotels set up in converted forts and palaces of

Rajasthan, India impose a “price of heritage” on tourists visiting Rajasthan to enjoy its rich

cultural heritage. Similarly, recall that in Study 2, we found that hotels charge a price

premium for rooms with views of the Niagara Falls. Study 3 was a survey of heritage

tourists, designed to investigate tourists’ perceptions of heritage hotels. We wanted to

address whether consumer perceptions of a hotel room are higher when the hotel room

overlooks a spot of scenic beauty, rich in heritage. More specifically, are consumers’

perceptions of quality greater? Are they more likely to rent a room with a heritage view? Do

they profess a higher willingness-to-pay for a room with a view? And are they more likely

to provide word-of-mouth publicity for heritage? We felt that this should indeed be the case.

5.1 Background and Hypotheses

Quality Perceptions: Consider the drivers of consumers’ quality perceptions. Consumers

are influenced by both affective and cognitive factors while assessing the overall quality of

hotel rooms (Chan and Tsai, 2007). Further, Otto and Ritchie (1996) show that quality has

two components -- “service quality” and “experience quality”. They find that consumers use

both dimensions to make overall quality evaluations of hotel rooms, although they tend to

over-weight “experience quality”. Further reflecting on this, Chan & Baum, (2007) have

explained that four factors drive “experience quality”, namely 1) hedonics, 2) peace of

mind, 3) involvement and 4) recognition. With this background about how consumers form

20

quality perceptions, consider the preferences of heritage tourists. Such tourists are known to

look for “experiences where the destination, its buildings and surrounding have retained

their historical characters well as lodging that reflects the local culture”. In other words,

heritage tourists exhibit strong desire to experience the local culture of the tourist place

(Kezeor & Ransom 2011). We argue that heritage tourists encounter a greater extent of

hedonics, involvement and recognition, while experiencing the culture of a heritage site and

staying in a heritage hotel in the proximity. And this leads to an overall higher quality

assessment of their hotel room. In this light, we make the following hypothesis:

H2: The quality perception of a hotel room with heritage is more than the quality

perception of a modern hotel room.

Purchase Intentions: Customer purchase intentions are defined as “A decision plan to buy

a particular product or service created through a choice / decision process” (Morrison, 1979,

Sweeney, Soutar, & Johnson, 1999). Given that our paper is written in the context of the

hotel industry, purchase intentions refer to the likelihood of consumers renting a given hotel

room at the price posted by the hotel. Past studies have suggested that quality perceptions

and price are antecedents of purchase intentions (Cronin et al., 2000; Duman & Mattila,

2005).In the light of the above, we make the following hypothesis.

H3: The purchase intentions for a hotel room with heritage (likelihood of renting the

room) is more than the purchase intentions for a modern hotel room.

Willingness to Pay: Heritage tourists participate in more heritage-related activities and

experiences (17 %), compared to conventional tourists (5%), as explained by Kezeor and

21

Ransom (2011). One explanation for this difference is that heritage tourists experience

greater hedonic enjoyment by participating in activities such as culinary festivals,

appreciating local food and wines (Mandala 2009). Moreover, heritage tourists stay for

longer durations and spend more money in comparison to conventional tourists (Kezeor and

Ransom 2011). Given this past research and in the light of our findings in Study 1 and Study

2, we make the following hypothesis.

H4: The willingness to pay for a hotel room with heritage is more than the

willingness to pay for a modern hotel room

Word-of-Mouth: Past research in tourism finds that word-of-mouth is closely influenced

by the difference between consumers’ experiences and prior expectations. Specifically, if

tourists’ actual positive experiences exceed their pre-travel expectations, then they are more

likely to generate positive word-of-mouth (Reisinger & Turner, 2003). Recall that quality

has two components -- “service quality” and “experience quality” (Otto and Ritchie 1996).

Past research shows that consumers’ assessment of “experience quality” leads to feelings of

pleasure and gratification, if it is higher than their pre-travel expectations (Bignie et al 2001;

Chen, 2008; Chen & Tsai, 2007; Choi & Chu 2001; De Rojas & Camarero, 2008).

Therefore, we argue that a heritage tourist who has experienced the culture of a tourist

place, is more likely to express positive word-of-mouth than a regular tourist. A tourist’s

likelihood of generating positive word-of-mouth will be influenced by the 1) hedonics, 2)

peace of mind, 3) involvement and 4) recognition he encountered during his stay at a hotel.

And this is likely to be stronger at a heritage hotel, compared to a modern hotel. In this light,

we present the following hypothesis.

22

H5: The likelihood of word of mouth publicity of a hotel room with heritage is more

than the likelihood of word of mouth publicity of a modern hotel room.

5.2 Method

The objective of this study was to investigate how heritage influences consumers’ quality

perception, purchase likelihood, willingness-to-pay and likelihood of positive word-of-

mouth. We investigated this in the context of renting a hotel room at a popular historical

destination in India. We selected the city of Agra, which has the world-famous Taj-Mahal.

The Taj-Mahal is acknowledged as one of the Seven Wonders of the World.

We manipulated the décor of a hotel room as either traditional or modern. In one condition,

the room had an ethnic, traditional look reflecting India’s rich cultural heritage. In the other

condition, the room has a modern, western décor. We also manipulated the view from the

window of the hotel room. In one condition, the Taj-Mahal was prominently visible from

the hotel room window, once again reflecting India’s rich cultural heritage. In the other

condition, the view was a neutral one showing the skyline.

The studies employed a full factorial design, comprising of four between-subject conditions

with hotel room décor (2: heritage versus modern) and outside view from the hotel room

window (2: heritage versus neutral) as factors.

161 undergraduate students from a large engineering college voluntarily participated in

response to a request to complete a web survey. The participants were told that during their

next upcoming holidays, they are planning a three-day vacation to see the Taj-Mahal in

Agra with their friends. They were told that they planned to reserve a hotel room in advance

for, two nights. They were asked to review the photograph of a hotel room and answer

23

survey questions. The participants were divided into four groups and sent a web link

showing one of four photos of a hotel room. As can be seen in the photographs in Figures 4-

7, two rooms had a modern décor while the other two had a heritage decor. Of the two

modern and heritage décor rooms, one had a view of the Taj-Mahal (heritage view), while

the other had a view of the skyline (neutral view). Thus, each one of the four groups saw

identical stimuli with different hotel room images.

<Insert Figures 4 – 7>

Dependent Variables: The four dependent variables in our study were1) quality perception

of the hotel room; 2) purchase intentions (likelihood of renting the hotel room); 3)

willingness-to-pay (room rent); 4) likelihood of positive word-of-mouth publicity.

Manipulation Checks: We did a manipulation check by asking subjects to rate the room

décor as modern or heritage and also rate the view from the room window as modern or

heritage, on a 7-point Likert scale. We also collected some demographic information from

the subjects (age, gender, monthly income). The summary statistics are available in Table 5.

<Insert Table 5>

5.3 Results

Quality Perception: A 2 (Room Décor: Heritage, Modern) x 2 (View from the Hotel Room

Window: Heritage, Neutral) ANOVA was performed on room quality perception. Gender,

age and monthly income were entered as covariates. There was no main effect of any

covariate showing the success of the random assignment. We found a main effect of Room

Décor, F(1, 157) = 8.52, p = .004 and a main effect of the View from the Hotel Room

Window: Heritage, Neutral, F(1, 157) = 17.15, p< 0.000. The quality perception for heritage

24

rooms (mean = 6.07, SD = 1.15) was more than for moderns rooms (mean = 5.54, SD =

0.80), 95% CI [.03, 1.29], p = .0018. Among the two types of views, room quality

perception was more for a heritage view as compared to a neutral view (mean difference =

0.74, 95% CI [.02, 1.32]), p< 0.000. There was no significant interaction between Room

Décor and View from the Hotel Room Window: Heritage, Neutral (p > .5). Thus, the

ANOVA results support hypothesis H1 --the quality perception of a hotel room with

heritage is more than the quality perception of a modern hotel room.

Purchase Intention: We found a main effect of Room Décor, F (1, 157) = 14.40, p = .000,

and a main effect of View from the Hotel Room Window, F (1, 157) = 40.01, p < 0.000.

Planned post-hoc tests showed that purchase intention for the heritage room (mean = 4.92,

SD = 1.64) was more than the purchase intentions for the modern room (mean = 3.92, SD =

1.55), 95% CI [.02, 1.85], p < .001. Comparing the two types of views, purchase intention

was more for a heritage view as compared to a neutral view (mean difference = 1.49, 95%

CI [.08, 2.68]), p<0.0001. There was no significant interaction between Room Décor and

View from the Hotel Room Window (p > .5). Thus, the ANOVA results support hypothesis

H2 -- the purchase intention for a hotel room with heritage (likelihood of renting the room)

is more than the purchase intention for a modern hotel room.

Willingness-to-pay (WTP): We found a main effect of Room Décor, F (1, 157) = 14.64 p <

0.000and a main effect of View from the Hotel Room Window, F (1, 157) = 19.70, p

=0.000. Planned post-hoc tests showed that the WTP for a heritage room (mean = 4928.57,

SD = 2060.93) was more than the WTP for a modern room (mean = 3690.48, SD =

1594.92), 95% CI [916.64, 3030.51], p <0.000. Comparing the two types of views, the WTP

for a heritage view was more than the WTP for a neutral view (mean difference = 1426.53,

25

95% CI [-75.64, 2099.53]), p = .0002. There was no significant interaction between Room

Décor and View from the Hotel Room Window (p > .5). Thus, the ANOVA results support

hypothesis H3 -- the WTP for a hotel room with heritage is more than the WTP for a

modern hotel room.

Word of Mouth Publicity: We found a main effect of Room Décor, F (1, 157) = 28.95, p<

0.000and a main effect of View from the Hotel Room Window, F (1, 157) = 41.46, p<

0.000. Planned post-hoc tests showed that chances for heritage rooms publicity (mean =

5.48, SD = 1.40) were more than word of mouth publicity for moderns rooms (mean = 4.25,

SD = 1.49), 95% CI [.53, 2.18], p < 0.0001. Comparing the two types of views, the

likelihood of word of mouth publicity for a heritage view was more than that for a neutral

view (mean difference = 1.39, 95% CI [.61, 2.31], p < 0.000. There was no significant

interaction between Room Décor and View from the Hotel Room Window (p > .4). Thus,

the ANOVA results support hypothesis H4 -- the likelihood of word-of-mouth publicity of a

hotel room with heritage is more than the likelihood of word-of-mouth publicity of a

modern hotel room. The ANOVA results are summarized in Table 6.

<Insert Table 6>

6. Conclusion

This paper was motivated by the need for research that could improve our understanding of

how heritage tourism influences the pricing strategies in the hotel industry. In this paper, we

investigated the price premium charged by hotels to heritage tourists who travel to

experience nature and/or culture. We found that tourists visiting Rajasthan in India pay a

hefty “price of heritage” for staying in culturally rich forts and palaces that have been

26

converted into hotels. We found a qualitatively similar effect among hotels in North

America. We observed hotels in Niagara Falls region charging price premiums for exposing

tourists to natural heritage. We also investigated consumer preferences of heritage tourists.

They exhibit higher quality perception, greater purchase intensions, likelihood of word-of-

mouth and an increased willingness-to-pay for hotels with heritage. Overall, this paper

demonstrates a significant “price of heritage” imposed by hotels and paid by heritage

tourists.

This research has some managerial implications. We find that heritage matters. When

consumers experience heritage, it prompts an increase in quality perceptions, purchase

intentions and willingness-to-pay. It also generates positive word-of-mouth. Moreover, our

results suggest that a heritage view and heritage décor both influence consumers, although

interestingly, a heritage view influences consumers relatively more than a heritage décor.

This implies that investing in a hotel location that oversees a heritage site, visible from the

hotel rooms, can yield a high return on investment. Similarly, making the décor of a hotel

room more ethnic and consistent with the heritage of the locale can also be a useful strategy

in making a hotel more appealing to heritage tourists. Such investments will raise the

likelihood of hotel rooms to be rented and yet, allow hotels to charge heritage tourists a

higher room price. This is a potentially win-win situation. The hotel is directly better-off

since it is increasing its revenue. The heritage tourists are indirectly better-off, since their

net utility from visiting the heritage destination and staying at the hotel is also likely to

increase.

27

7. References

Akaike, H. (1974). A new look at the statistical model identification. Automatic Control,

IEEE Transactions on, 19(6), 716-723.

Bignie, J. E., Sanchez, M. I., & Sanchez, J. (2001). Tourism image, evaluation variables and

after-purchase behavior: inter-relationships. Tourism Management, 22(6), 607–616.

Bridaa, Juan Gabriel, Marta Meleddub, & Manuela Pulinac. (2012). “Understanding

Urban Tourism Attractiveness.” Journal of Travel Research, 51 (6): 730-41.

Chan, J. K. L., & Baum, T. (2007). Eco tourists’ perception of ecotourism experience in

lower Kinabatangan, Sabah, Malaysia. Journal of Sustainable Tourism, 15(5), 574

590.

Chen, C.-F. (2008). Investigating structural relationships between service quality, perceived

value, satisfaction, and behavioral intentions for air passengers: Evidence from

Taiwan. Transportation Research Part A, 42(4), 709–717.

Chen, C.-F., & Tsai, D. (2007). How destination image and evaluative factors affect

behavioral intentions? Tourism Management, 28, 1115–1122.

Choi, T. Y., & Chu, R. (2001). Determinants of hotel guests’ satisfaction and repeat

patronage in the Hong Kong hotel industry. Hospitality Management, 20,277

297.

Chu, R. K. S., & Choi, T. (2000). An importance-performance analysis of hotel selection

factors in the Hong Kong hotel industry: a comparison of business and leisure

travelers. Tourism Management, 21(4), 363-377.

Clewer, A., Pack, A., Sinclair, M. T., Johnson, P., & Thomas, B. (1992). Price

competitiveness and inclusive tour holidays in European cities. Choice and demand

in tourism, 123-143.

Cronin, J. J., Brady, M. K., & Hult, G. T. M. (2000). Assessing the effects of quality, value

and customer satisfaction on consumer behavioral intentions in service

environments. Journal of Retailing, 76(2), 193–218.

Cronin, J. J., & Taylor, S. A. (1992). Measuring service quality: a re-examination and

extension. Journal of Marketing, 56, 55–68.

De Rojas, C., & Camarero, C. (2008). Visitors’ experience, mood and satisfaction ina

heritage context: evidence from an interpretation center. Tourism Management, 29,

525–537.

28

Dranove, D., Gron, A., & Mazzeo, M. J. (2003). Differentiation and competition in HMO

markets. Journal of Industrial Economics, 51(4), 433-454.

Dubé, L., & Renaghan, L. M. (2000). Creating visible customer value. Cornell Hotel and

Restaurant Administration Quarterly, 41(1), 62-72.

Duman, T., & Mattila, A. S. (2005). The role of affective factors on perceived cruise

vacation value. Tourism

Espinet, J.M., Saez, M., Coenders, G., & Fluvià, M.(2003). Effect on prices of the attributes

of holiday hotels: a hedonic prices approach. Tourism Economics, 9(2), 165-177.

Hoffman, K., Turley, L. W., & Kelley, S. W. (2002). Pricing retail services. Journal of

Business Research, 55(12), 1015-1023.

Huang, C. H., Tsaur, J. R., & Yang, C. H. (2012). Does world heritage list really induce

more tourists? Evidence from Macau. Tourism Management, 33(6), 1450-1457.

Hung, W. T., Shang, J. K., & Wang, F. C. (2010). Pricing determinants in the hotel industry:

quantile regression analysis. International Journal of Hospitality Management,

29(3), 378-384.

Ivanov, S. (2014). Hotel Revenue Management: From Theory to Practice. Zangador.

Kezeor, J., & Ransom, E. (2011). College of Business Administration, University of

Nebraska-Lincoln.

Lockyer, T. (2005). Understanding the dynamics of the hotel accommodation purchase

decision. International Journal of Contemporary Hospitality Management, 17(6),

481-492.

Mandala, Laura. The Cultural and Heritage Traveler. Mandala Research. 2009. Study.

Mazzeo, M. J. (2002). Product choice and oligopoly market structure. RAND Journal of

Economics, 33(2), 221-242.

Morrison, L. V. (1979). Re-determination of the decade fluctuations in the rotation of the

Earth in the period 1861–1978. Geophysical Journal International, 58(2), 349-360.

Nuryanti, W. (1996). Heritage and postmodern tourism. Annals of tourism research, 23(2),

249-260.

Otto, J. E., & Ritchie, J. R. B. (1996). The service experience in tourism. Tourism

Management, 17 (3), 165-174.

29

Papatheodorou, A. (2002). Civil aviation regimes and leisure tourism in Europe. Journal of

Air Transport Management, 8(6), 381-388.

Poria, Y., Reichel, A., & Cohen, R. (2013). Tourist’s perceptions of World Heritage Site

and its designation. Tourism Management, 35, 272-274.

Reisinger, Y., & Turner, L. W. (2003). Cross-cultural behavior in tourism: Concepts and

analysis. Oxford: Butterworth-Heinemann.

Richards, G. (1996). Production and consumption of European cultural tourism. Annals of

tourism research, 23(2), 261-283.

Rosen, S. (1974). Hedonic Prices and Implicit Markets: Product Differentiation in Pure

Competition. Journal of Political Economy 82:34-55.

Rowley, J. (1997). Principles of price and pricing policy for the information marketplace.

Library Review, 46(3), 179-189.

Silberberg, Ted. (1995). “Cultural Tourism and Business Opportunities for Museums and

Heritage Sites.” Tourism Management, 16 (5): 361-65.

Sinclair, M.T. & Tsegaye, A. (1990). International Tourism and Export Instability. Journal

of Development Studies. 26(3), 487-574

Smyth, G. K., & Verbyla, A. P. (1996). A conditional likelihood approach to residual

maximum likelihood estimation in generalized linear models. Journal of the Royal

Statistical Society. Series B (Methodological), 565-572.

Strauss, Charles H., & Bruce E. Lord. (2001). “Economic Impacts of a Heritage Tourism

System.” Journal of Retailing and Consumer Services, 8 (4): 199-204.

Sweeney, J. C., Soutar, G. N., & Johnson, L. W. (1999). The role of perceived risk in the

quality value relationship: a study in a retail environment. Journal of retailing, 75(1),

77-105.

Schwarz, G. (1978). Estimating the dimension of a model. The annals of statistics, 6(2),

461-464.

Wu, L. (1999). The pricing of a brand name product: franchising in the motel services

industry. Journal of Business Venturing, 14(1), 87e102

Yale, Pat. (1991). From Tourist Attractions to Heritage Tourism. London: ELM

Publications.

Yang, C.-H., Lin, H.-L., & Han, C.-C. (2010). Analysis of international tourist arrivals in

China: the role of World Heritage Sites. Tourism Management, 31(6), 827-837.

30

Table 1: Summary Statistics in Study 1

City Type

Of Hotel

N Star Price

Airport Station Rooms

Bar Busines

s

Center

Mean (S.D.)

Jodhpur Heritage 21 4.14

(0.72)

12269.04

(13921.38)

4.5

(3.35)

3.47

(2.44)

38.95

(25.9)

0.76

(0.43)

0.33

(0.48)

Modern 1 5 (0) 12000 (0) 115 (0) 115 (0) 32 (0) 0 (0) 1 (0)

Jaipur Heritage 13 4.92

(0.27)

14184.61

(10454.81)

14.96

(6.89)

9.16

(8.37)

114.38

(60.27)

1 (0) 0.92

(0.27)

Modern 15 4.4

(0.5)

8333.33

(12429.32)

13.93

(11.93)

10.13

(7.87)

108.46

(55.37)

1 (0) 0.93

(0.25)

Udaipur Heritage 15 4.66

(0.61)

13050

(7648.64)

30.73

(17.7)

12.66

(22.62)

52.8

(33.97)

1 (0) 0.86

(0.35)

Modern 7 4.71

(0.48)

5735.71

(897.54)

25.71

(3.3)

6.28

(2.69)

87.42

(72.23)

0.85

(0.37)

0.57

(0.53)

Jaisalmer Heritage 4 4.5

(0.57)

15000

(15448.84)

4 (1.22) 2.62

(0.62)

59 (42.03) 1 (0) 1 (0)

Modern 1 5 (0) 3000 (0) 9 (0) 3.5 (0) 42 (0) 1 (0) 1 (0)

All Heritage 53 4.5

(0.66)

13166.03

(11407.48)

14.45

(14.99)

7.4

(13.15)

62.88

(49.33)

0.9

(0.29)

0.67

(0.47)

Modern 24 4.54

(0.5)

7506.25

(9869.52)

21.37

(22.78)

13.1

(22.69)

96.37

(60.46)

0.91

(0.28)

0.83

(0.38)

Total 77 4.51

(0.62)

11401.94

(11201.7)

16.61

(17.92)

9.18

(16.77)

73.32

(54.91)

0.9

(0.28)

0.72

(0.44)

31

Table 2: Regression Analysis in Study 1

Model 1 Model 2 Model 3

β SE β SE β SE

Intercept 7506.25 ** 2236.96 -31091.99 ** 9753.46 -32140.57 9263.54

Heritage 5659.79 * 2696.28 6025.79 * 2699.87 4684.67 * 2222.26

Star 8643.55 *** 2207.12 8660.66 *** 1934.97

Airport -39.84 142.04

Station 87.02 145.93

Rooms 13.49 25.79

Bar 722.37 4620.35 3292.89 3855.66

BusinessCenter -1717.79 3475.35 -2184.46 2616.40

City -1107.97 1623.81

−2LL -824.491 -814.612 -770.291

AIC 1654.983 1649.224 1560.582

32

Table 3: Summary Statistics in Study 2

View from the Hotel Room Sample (N) Price in $

Mean (SD)

City View 65 $186.69 (73.84)

Canadian View 65 $213.15 (83.27)

Canadian and US View 65 $237.77 (49.50)

All Rooms 195 $212.54 (88.41)

Table 4: Regression Analysis in Study 2

β SE t-statistics

Intercept 164.531 13.359 12.316

Heritage View 22.656* 10.348 2.190

Weekend 44.2567* 18.748 2.361

HeritageView*Weekend 5.677 14.522 0.391

33

Table 5: Descriptive Statistics in Study 3

Dependent Variables: Purchase Intentions, Quality Perceptions about Hotel Room, Willingness-to-pay and

Word of Mouth

Room Decor Purchase Int. Quality

Perception

Willing to Pay Word of

Mouth

Hotel View from Balcony Mean (SD)

Modern Neutral (N=32) 3.01 (1.37) 5.26 (0.68) 3171.88 (1516.61) 3.45 (1.26)

Taj-Mahal (N=31) 4.85 (1.11) 5.83 (0.81) 4225.81 (1515.69) 5.08 (1.25)

Total (N=63) 3.92 (1.55) 5.54 (0..80) 3690.48 (1594.92) 4.25 (1.49)

Traditional Neutral (N=41) 4.26 (1.67) 5.63 (1.08) 4048.78 (1932.63) 4.86 (1.44)

Taj-Mahal (N=57) 5.39 (1.45) 6.38 (1.10 ) 5561.40 (1927.41) 5.93 (1.20)

Total (N=98) 4.92 (1.64) 6.07 (1.15) 4928.57 (2060.93) 5.48 (1.40)

Total Neutral (N=73) 3.71 (1.66) 5.47 (0.94) 3664.38 (1804.81) 4.24 (1.53)

Taj-Mahal (N=88) 5.20 (1.36) 6.19 (1.04) 5090.91 (1896.07) 5.63 (1.28)

Total (N=161) 4.53 (1.67) 5.86 (1.05) 4444.10 (1981.95) 5.00 (1.55)

34

Table 6: Two-Way ANOVA analysis in Study 3

Quality

Perceptions

Source Type III

Sum of

Squares

df Mean Square F Sig.

Corrected Model 29.047 3 9.682 10.15 .000

Intercept 5061.844 1 5061.844 5307.12 .000

Room Décor 8.130 1 8.130 8.52 .004

View from Hotel Balcony 16.363 1 16.363 17.15 .000

Room Decor * View room

Hotel Balcony

.302 1 .302 .317 .574

Error 149.744 157 .954

Total 5709.889 161

Corrected Total 178.791 160

Purchase

Intention

Corrected Model 122.089 3 40.696 19.524 .000

Intercept 2915.564 1 2915.564 1398.732 .000

Room Décor 30.474 1 30.474 14.620 .000

View from Hotel Balcony 83.412 1 83.412 40.017 .000

Room Decor * View room

Hotel Balcony

4.818 1 4.818 2.312 .130

Error 327.256 157 2.084

Total 3754.750 161

Corrected Total 449.345 160

Willingness

-to-pay

(WTP)

Corrected Model 130835325.32 3 43611775.10 13.75 .000

Intercept 2743375751.89 1 2743375751.89 865.46 .000

Room Decor 46425140.920 1 46425140.92 14.64 .000

View from Hotel

Balcony 62472177.70 1 62472177.70 19.70 .000

Room Decor * View

room Hotel Balcony 1995387.23 1 1995387.23 .62 .429

Error 497661569.08 157 3169818.91

Total 3808250000.00 161

Corrected Total 628496894.41 160

Word of

Mouth

Corrected Model 126.859 3 42.286 25.405 .000

Intercept 3541.201 1 3541.201 2127.470 .000

Room Decor 48.260 1 48.260 28.994 .000

View from Hotel Balcony 69.014 1 69.014 41.462 .000

Room Decor * View room

Hotel Balcony

2.947 1 2.947 1.771 .185

Error 261.328 157 1.665

Total 4415.688 161

Corrected Total 388.187 160

35

Figure 1: The Oberoi Rajvilas in Jaipur, Rajasthan, India in Study 1

(http://www.oberoihotels.com/oberoi_rajvilas/ )

Figure 2: The Oberoi in Bangalore, India in Study 1

(http://www.oberoihotels.com/oberoi_bangalore/)

36

Figure 3: Hilton Embassy Suites, Niagara Falls, USA Rooms with three types of views – 1)

Both Canadian and US Falls; 2) Canadian Falls only; 3) No view of the falls.

(http://www.embassysuitesniagara.com/)

View Average

Price

Canadian & US Falls

$238

Canadian Falls only

$213

No view of the falls

$187

37

Figure 4: Hotel with modern décor and neutral view from the balcony (Study 3)

Figure 5: Hotel with modern décor and heritage view from the balcony (Study 3)

38

Figure 6: Hotel with heritage décor and neutral view from the balcony

Figure 7: Hotel with heritage décor and heritage view from the balcony