Budget hotels in Madeira: prospects and market trends

António Almeida

Abstract


Purpose: The term low-cost has come into common use by the tourism industry in the 90s. The concept is highly attractive to destinations recording growth rates below expectations. This study aims at providing a detailed analysis of the principal factors affecting the budget hotel’s development prospects in a mature destination.

Methodology: This study is based on survey carried out amongst 3-star hotel guest to identify the critical factors of success of this brand-new market niche.

Findings: Based on the results of a survey, we suggest that most visitors display a high level of disinterest in the low budget concept. The current pricing trends based on 4 and 5 stars hotels offering discounted rates prevents any attempt of developing innovative concepts based on price moves. The average visitors only accept a decrease in their level of comfort (eg. attributes and services) in exchange for huge discounts. 

Practical implications: This study suggests that respondents appear to refuse lower levels of comfort in exchange for marginal discounts appear to be unfeasible. Therefore, the is no easy room for ready-to-use measures and concepts and further research is needed to re-understand customers and to study new concepts adapted to this highly uncomfortable position. 

Originality/Value: This study shed some light on the prospects of developing accommodation services based on basic hotel facilities in mature destinations marked by development strategies focused on top quality accommodation and well-off tourists. Our results highlight the responsibility of governments and industry operators in developing coherent long term strategic thinking.

Keywords: low-cost, Madeira Island, Madeira hotel´s, tourism, hotels.


Full Text:

PDF

References


BDO Singapoure (2005). The future of budget accommodation - Delivering Value That Appeals to The Hearts and Minds of the New Traveler. Retrieved from http://www.bdo.com.sg/getattachment/7f2150d3-3e8d-46d4-8d93.

Blanco, A., Oehmichen, A., & Frood, S. (2011). European hotel development – Focus on budget hotels. Journal of Retail & Leisure Property, 9, 373 – 379.

Brotherton, B. (2004). Critical success factors in UK budget hotel operations. International Journal Operations & Production Management, 24 (9/10), 944–969.

Chan, N., Ni, S. (2011). Growth of Budget Hotels in China: Antecedents and Future. Asia Pacific Journal of Tourism Research, 16(3), 249-262.

Clemes, M., Gan, C., Ren, M., (2011). Synthesizing the effects of service quality, value, and customer satisfaction on behavioral intentions in the motel industry: an empirical analysis. Journal of Hospitality & Tourism Research, 35, 530–568.

Fiorentino, A. (1995). Budget hotels: Not just minor hospitality products. Tourism Management, 16(6), 455–462.

Gu, H., Ryan, C., (2008). Chinese clientele at Chinese hotels—preferences and satisfaction. International Journal of Hospitality Management, 27, 337–345.

Gu, H., Ryan, C., Yu, L. (2012). The changing structure of the Chinese hotel industry: 1980-2012.Tourism Management Perspectives, 4, 56–63.

Hua, W., Chan, A., & Mao, Z. (2009). Critical Success Factors and Customer Expectation in Budget Hotel Segment — A Case Study of China. Journal of Quality Assurance in Hospitality & Tourism, 10(1), 59-74.

Justus, G.R. (1991). Microtel: how “simple” translates into success. Cornell Hotel Restaurant Administration Quarterly, 32(4), 50–54.

Knutson, B.J., Beck, J.A., Kim, S., Cha, J., (2009). Identifying the dimensions of the guest’s hotel experience. Cornell Hospitality Quarterly, 50, 44–55

Kozak, M., & Martin, D. (2012). Tourism life cycle and sustainability analysis: profit-focused strategies for mature destinations. Tourism Management, 33(1), 188–194.

Luo, H., Yang, Y. (2016). Intra-metropolitan location choice of star-rated and non-rated budget hotels: The role of agglomeration economies. International Journal of Hospitality Management, 59(October), 72-83.

Mohsin, A., Lengler, J. (2005). Service experience through the eyes of budget hotel guests: Do factors of importance influence performance dimensions? Journal of Hospitality and Tourism Management, 23, 23-34.

Nash, R., Thyne, M., & Davies, S., (2006). An investigation into customer satisfaction levels in the budget accommodation sector in Scotland: a case study of backpacker tourists and the Scottish Youth Hostels Association. Tourism Management, 27, 525–532.

Payne, K., (2005). Economy lodging: Always in transition. Westchester County Business Journal, 44(6), 25.

Peng, J., Zhao, X., & Mattila. A. (2015). Improving service management in budget hotels. International Journal of Hospitality Management, 49, 139–148.

Perales, R. (2002). Rural tourism in Spain. Annals of Tourism Research, 29(4), 1101-1110.

Rahimi, R., Kozak, M. (2016). Impact of Customer Relationship Management on Customer Satisfaction: The Case of a Budget Hotel Chain. Journal of Travel & Tourism Marketing, 34, 1-12.

Ren, L., Qiuc, H., Wang, P., & Lin, P., (2015). Exploring customer experience with budget hotels: Dimensionality and satisfaction. International Journal of Hospitality Management, 52, 13–23.

Senior, M., Morphew, R. (1999). Competitive strategies in the budget hotel sector. International Journal of Contemporary Hospitality Management, 2(3), 3–9.

Subramanian, N., Gunasekaran, A., & Gao, Y. (2016). Innovative service satisfaction and customer promotion behaviour in the Chinese budget hotel: an empirical study. International Journal of Production Economics, 171, 201–210.

Turismo de Portugal (2007). Plano Estratégico Nacional do Turismo – para o desenvolvimento do turismo em Portugal. Lisboa: Turismo de Portugal, I.P.

Yan, Q., Shen, H., Kong, H. (2016). Assessing Hotel Cost Control Through Value Engineering: A Case Study on the Budget Hotels in a Middle-sized City in China. Asia Pacific Journal of Tourism Research, 21(5), 512-523.

Zhang, H., Ren, L., Shen, H., Xiao, Q. (2013). What contributes to the success of home inns in China? International Journal of Hospitality Management, 33, 425–434.

Zhang, J., Cai, L.A., Kavanaugh, R.R., (2008). Dimensions in building brand experience for economy hotels—a case of emerging market, Journal of China Tourism Research, 4, 61–77.




Copyright (c) 2017 European Journal of Applied Business and Management

ISSN: 2183-5594 

Indexing: GOOGLE SCHOLAR - LATINDEX - DRJI - ICI JOURNALS MASTER - REDIB