Five-star quality at three-star prices? Opaque booking and hotel service expectations

Abstract

While opaque products and distribution channels are increasingly popular, little is known about how customers perceive the quality of opaque hotel rooms. This study examined how price and star rating affect customers’ expectations when booking through opaque channels, and explored if different market segments vary in their expectations. An experimental design with six price and star-rating scenarios was employed. As predicted, expectations were significantly lower in opaque bookings. Moreover, customers were willing to compromise certain aspects of five-star service quality in exchange for opaque prices, such as room décor. Findings also revealed that customers who typically stayed at five-star hotels had the biggest gap in their expectations of three-star versus five-star hotel rooms of similar prices. As opaque selling is relatively new in Asia, this study is the first to explore customers’ perceptions of opaque booking from the perspective of young, Hong Kong consumers. Theoretical and practical implications are discussed.

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