Factors influencing willingness of customers of environmentally friendly hotels to pay a Price Premium

Abstract

Purpose– The purpose of this paper is to investigate the influence of customers’ environmental concerns, customers’ perceptions of a hotel’s environmental practices, and of the hotels’ environmentally friendly images, on customers’ willingness to pay a Price Premium to stay at environmentally friendly hotels. Design/methodology/approach- The theoretical framework comprises both Social Identity Theory and Value-Belief-Norm Theory. The data was collected from a survey conducted on 454 customers staying at eco-friendly hotels in Spain. The research model is tested by using a structural equation modelling approach. Findings- The findings illustrate that customers’ environmental concerns have a greater explanatory value on their willingness to pay a Price Premium than do their perceptions of the hotels’ environmental practices. Furthermore, these causal relationships are similar in magnitude when considering the mediating effects of the hotels’ environmentally eco-friendly image and the environmental practices. Practical Implications - The empirical findings provide managers with a better understanding of how customers’ environmental concerns and their own sense of identification with environmentally friendly hotels influence customers’ behavioural intentions towards willingness to pay a premium. Originality/Value- The paper contributes to the literature by highlighting those cognitive processes that influence the customers’ willingness to pay a Price Premium to stay at environmentally friendly hotels. Hence, the study provides valuable information to hotel managers.