­Factors That Influence Chinese Tourists Hotel Selection in Thailand

ABSTRACT

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This research aims to explore how Chinese tourists make hotel selection in Thailand, with an ultimate goal to help the local hoteliers find the right marketing strategy to improve hotel business and attract Chinese customers. This research used online questionnaire and surveyed 216 students at Southwestern University of Finance and Economics in Sichuan, China. The questions were translated into Chinese to control the quality of the research. This research focused on four important marketing factors including product, price, place, and promotion.

The result showed that all factors have a significant influence on Chinese tourists and product was the most important followed by price, place and promotion. This research suggested that hoteliers should not only focus on just one factor to satisfy customers’ needs. Therefore product, price, place and promotion should be developed at the same time.

Key words: hotel selection, Chinese tourists, marketing factors

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CHAPTER 1 INTRODUCTION

1.1 BLACKGROUND

Thailand has a variety of natural tourist attractions, including forests, mountains, and sea. It’s also known as the land of rich culture heritage, many such festivals are frequent in this land such as Thai traditional New Year Festival (i.e. water festival), which is considered the best festival in Thailand. Additionally, the Thai people are considered to be incredibly friendly and hospitable to outsiders, which helps hospitality business to perform better, relative to other countries, making Thailand one of the fascinating countries for travelers.

The tourism industry is a major economic source in Thailand. According to the Tourism Department of Thailand, the country received the most foreign tourists to Thailand in 2011 was from Malaysian with the number of 2,500,280, followed by 1,721,247 Chinese tourists and 1,277,893 Japanese tourists. At the end of 2012, the Chinese film – Lost in Thailand, which was shot in Chiang Mai province Thailand, was released in China. A significant increase in the number of Chinese tourists was observed, jumping to 4,637,335 in 2013 and the number kept increasing as time progressed. In 2015, a total of 29,881,091 tourists traveled to Thailand. Chinese record the most foreign tourists who travel to Thailand with the number of 7,934,791 (Wikipedia.com, 2015). In recent times, Chiang Mai, Bangkok, Pattaya, and Phuket are top tourism attractions among Chinese tourists (Department of Tourism, 2015).

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Figure 1: Tourists in Thailand by Regions 2015

Source: The Department of Tourism (2015)

Chinese tourists contribute the most to the Thai tourism industry and show a significant impact on Thai hospitality industry. This includes restaurants, transportation and accommodation, especially hotel service. Traveling from China to Thailand need to take a long journey, tourists will at least stay a few days in Thailand. On average, visitors will stay about eight days in Thailand (ThaiWebsites.com, 2015). Thus, given the significance of the tourism sectors to the Thai economy, it is imperative to focus on the hotel sector.

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In 2015, the revenue from tourism industry is approximately 42.544 billion U.S. dollars in Thailand (ThaiWebsites.com, 2015). According to the total expenditure by regions, the total expenditure of Chinese tourists has rivalled that of tourists from all European countries. Specifically, Chinese tourists spent 11,348 million U.S. dollars and the total expenditure of European tourists is 11,539 million U.S dollars (ThaiWebsites.com, 2015)

Figure 2: Expenditures per day of tourists in Thailand 2015

Source: The Department of Tourism (2015)

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The graph above shows the spending per day of all tourists in Thailand. We can see that 29 percent of the total expenditure goes to accommodation, 25 percent for shopping, and 20 percent goes to food and beverage. It implies that most visitors prefer to stay at a good accommodation, three stars and above, rather than budget hostel or premium resorts.

The objective of this research is to explore what influences Chinese tourists when selecting hotel in Thailand, in terms of product, price, place, and promotion. I used these four important factors from prior research (Chaithanee, 2013; Pungnirund, 2011; Phadungyat, 2008; Rattanakitrungrueang, 2006) as a guideline. This research could help Thailand hoteliers understand Chinese customer’s demands, which will be useful for the development and improvement of hotel business by attracting new customers and preserving customer loyalty. Understanding customers could help hoteliers to differentiate from competitors, develop an advantage from the competition, improve business performance, enhance customer royalty, and attract new customers as well (Choosrichom, 2011; Law & Yib, 2010).

1.2 SCOPE OF THE STUDY

This research will focus on four factors that influence Chinese tourists when they make their selection of hotel in Thailand, including product factors, price factors, place factors, and promotion factors.

Product refers to the goods and services that hoteliers offer to the customers. There are various attributes that customers may be attracted to hotel products, such as room facilities, quality of services, and brand name, etc. Research on customers could help hoteliers understand what customers want on product features, and thus hoteliers could bring effective strategy to attract customer.

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Price refers to how much hoteliers charge customer on product and service. Some of hotel business owners are of the view that lower prices could help them obtain a comparative advantage from the competitors. However, this may be a signal that customers view the hotel products and services as low quality. The growth of business would not only depend on price of product but base on the demand of customer as well.

Place refers to the channels that hoteliers used to distribute products to customers. To be effective, hoteliers should focus on market research to promote product via appropriate channels.

Promotions refer to special offerings designed to increase sales and advertise products. Promotions might offer through many alternatives, and therefore hoteliers need to seek which alternatives will influence customer decision.

A good combination of these factors could help hoteliers satisfy customers and create a profitable hotel business. Once the hoteliers understand customers then they can develop a better marketing strategy to promote the right product attributes, in the right price, through the right places, and with right promotion alternatives.

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1.3 RESEARCH QUESTIONS AND HYPOTHESIS

This research conducted four hypotheses, which they were stated below:

• H1: Product factor is the most important for the Chinese tourists when making hotel selection in Thailand.
• H2: Price factor is the most important for the Chinese tourists when making hotel selection in Thailand.
• H3: Place factor is the most important for the Chinese tourists when making hotel selection in Thailand.
• H4: Promotion factor is the most important for the Chinese tourists when making hotel selection in Thailand.

1.4 OVERIEW OF RESEARCH AND METHODOLOGY

The methodology of this research consists of several research instruments, including sampling, quality control, and research design. I used online questionnaires to collect data. The data was collected by surveying 216 Chinese students at Southwestern University of Finance and Economics in Sichuan, China. The questionnaire was translated into Chinese and the length of content was limited to control the quality of research. The questionnaire was divided into three parts: first part and second part were personal information and traveling behaviors, the third part was about influencing factors including product, price, place, and promotion. Mean and standard division was used to analyze personal information and travelling behavior. In addition, T-tests were conducted to test whether there was significant difference between the four marketing factors.

1.5 SIGNIFICANCE OF THE STUDY

There are several research studies that have been done on factors influence customers’ hotel selection. However, researchers have not focused any research on Chinese tourists’ hotel selection in Thailand. Therefore, this research will focused on Chinese tourists. Thus, the findings of this research would help hoteliers to have a better understanding of Chinese tourists’ hotel selection and travelling behaviors as well. It could help hoteliers to create a better product and service design to satisfy Chinese tourists and attract new Chinese tourists.

1.6 OVERVIEW OF THE THESIS

This research consisted of 5 chapters.

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Chapter 1 contains background description and statement of problem.

Chapter 2 is literature review of prior research on factors that influence hotel selection. The main topics reviewed concerning about how marketing mix (i.e., product, price, place, and promotion) influences customers when they make hotel selections.

Chapter 3 describes the methodology used in this research, including instruments used in this research, the target population, quality control, and research design.

Chapter 4 describes how the results were analyzed by using frequency, percentage, mean and standard deviation. This chapter also summarizes the finding of the research.

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Chapter 5 concludes the overall of research, including the purpose the research, the finding, discussion, recommendations for hoteliers, and the limitations and suggestions for future research.

CHAPTER 2 LITERATURE REVIEW

This chapter will review prior research that relates to the study of factors influencing customer decision making on product/service and customer decision on hotel.

2.1 CUSTOMERS DECISION ON PRODUCTS AND SERVICES

Many prior research studies have demonstrated that price, quality of product, service, technology, promotion, and placing influence customer decision on products/service. For instance, Young (2015) indicated that before purchasing a product, the first four factors consumers would like to consider are price, quality, technology, and feature of product. Even though customers consider price to be the most important factor, they would pay more if the product has updated with good features and better quality. Pugazhenthi (2010) found that price is the most important for customers as well, while no matter what group of customers is, price, product quality and availability of products are the three main determinants in the selection process.

Although prices has an effect on customers’ decision but price does not directly affect customers’ decision when the customer decision influenced towards in stimulus in the environment. Hansen (2000) researched on consumer decision making and indicated that price matters to customer when they make a decision on unknown product; however, price does not matter that much when customer buy a product has good quality and with a reputable brand. Gan et al. (2015) argued the convenience, service quality and technology all have a significant positive relationship with service selection, while price of service is significantly negative.

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Pungnirund (2011) studied on the factors that influence customer purchasing behavior as well, with a focus on seven elements that may influence the decision including product, price, place, promotion, people, physical environment, and process. Results showed that price, place and product have significant influences on customers’ decision. This is consistent with the research of Rattanakitrungrueang (2006), which found that place, promotion, and price influence on the decision of tourists.

2.2 CUSTOMERS DECISION ON HOTELS

For the hotel business, Hoteliers can find ways to satisfy customers with their product and service by understanding customers’ want. Understanding customers’ want can increase customer loyalty and bring new customers through positive word-of-mouth (Marketing Donut, 2016). Choosrichom (2011) also stated that a better understanding of customers would help hoteliers to develop customer loyalty for their products and services. Similarly, Law and Yib (2010) said that the quality of service, such as the manners and courtesy of staff, could help hoteliers enhance customer satisfaction, loyalty, and willingness to recommend to others.

Petra and Žana’s (2012) research on how customers choose hotel showed that important factors influencing customer decision are personal experience, word of mouth communication; while location of hotel has no effect on customer decision, it could help hoteliers have a competitive price. Hameed and Ashraf (2014) have expressed a similar view, the location of hotel has no effect on decision, but hotel reservation and payment process would effect in customer decision. The research of Srisopha, Homchan, and Chaiyason (2013) stated that marketing mix (i.e., product, price, place, and promotion) all have influence on customers when they select the hotel, however placing is influenced at the highest level.

Wijayanto’s (2015) research on hotel selection of customers indicated that three significant variables that have impacts on customer decision include price, manner of staff, and physical evidence; while product, place, promotion, and the process do not significantly influence customer decision. Chaithanee (2013) discovered that different group of tourists represent in different of decision making. Specifically, the author found that the feature of hotel influenced Thai tourists more than international tourists who are more influenced by price. Similarly, the research of Phadungyat (2008) showed that price is the most important factor that affect business traveler s’ decision on hotel selection, followed by service and brand while place is least important.

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Hameed and Ashraf (2014) conducted 330 questionnaires from customers in five star hotels in Jordan and found that customers ranked the trademark of international brand as most important when they make hotel selection, followed by safety consideration. In particular, even if the hotel is very comfortable or has good features but if there is not safe, customers would better take other place to stay. The research done by Choosrichom (2011) also revealed that security or safety is the most influential factor when customers make a hotel selection followed by price, service, location, room quality, and hotel facility respectively.

Based on prior research, I noticed that the most important alternative that influences customers’ hotel selection is marketing mix, including product, price, place, and promotion. Marketing mix is an important strategy that companies used to run a business (Kotler, 2003). According to prior research, no researcher has focused on factors that influence Chinese consumer s’ decision when make hotel selection in Thailand. Therefore, the primary objective of this research is to figure out which factor is most important for Chinese tourists’ hotel selection in Thailand.

CHAPTER 3 METHODOLOGY

3.1 RESEARCH INSTRUCTMENT

This research used questionnaires to collect data. The questionnaire used close-end questions. Respondents filled in the first two parts in multiple choices about personal information and travelling behaviors. On marketing part, respondents answered the questions by using rating scales to measure their attitude. The purpose of using this method is because close-end questionnaires are suitable for quantitative surveys and the data can be easy to analyze (Sincero, 2012). The questionnaire could help to find out how consumers select the hotel, how they make decisions, what they are looking for, as well as how they respond to advertising from hoteliers. An online questionnaire was used, as online questionnaire is the cheapest and the most convenient way to collect the data.

3.2 SAMPLING

The target populations of this research were Chinese students at The Southwestern University of Finance and Economics, Sichuan, China. Finally, a total of 216 students responded to the questionnaire, including students who had visited Thailand and those who had never visited Thailand but intended to visit it in the future. The questionnaire was sent through Wechat and respondents were asked to share the questionnaire to their friends. Respondents were not required to send the questionnaire back. The responses will be stored in a survey database automatically.

3.3 QUALITY CONTROL

To control the quality of this research, the questionnaire was translated from English to Chinese to help participants have a better understanding of the questions and thus they can give the right answers, following what Chaithanee (2013) did in his research on consumer decision making in hotel selection. Moreover, the length of the contents in the questionnaire was limited to a certain level to prevent fatigue. Sometimes respondents are unwilling to answer questions because the survey is too long. They may feel bored or too busy to respond to the questions thus they will give a wrong answer.

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3.4 RESEARCH DESIGN

The questionnaire for this research included three parts. The first part is general personal information related to the background of tourists such as gender, age, educational levels, hometown and average living expense per month. The second part is about the travelling behavior, which respondents were asked about which places in Thailand they plane to visit, in which season they plan to visit Thailand, and who they want to travel with, etc. The third part is about influencing factors. Respondents were requested to rank factors from least important to most important when they make hotel selection, using a 5-point Likert scale, with 1 represents the least important and 5 represents the most important. The influencing factors included a hotel product, price, hotel’s booking channel and promotion. The questionnaire was developed according to relative prior research (Chaithanee, 2013; Pungnirund, 2011; Phadungyat, 2008; Rattanakitrungrueang, 2006) was finalized after several discussions with my supervisor.

Frequency and Percentage were calculated to analyze data on personal information and the personal behavior part to check whether there were any differences in demographic and behavioral traits of the respondents. Mean and standard deviation were used in the third part. Mean was used for analyzing whether hotel product, price, place, and promotion had influences on respondents’ decision. The standard deviation was used to analyze how responses are spread out. If the responses were not much different, it indicated that the responses were centralized and the standard deviation will have a lower score. However, if the opinions of respondents were very different, it indicated that the responses were polarized, and thus the standard deviation will have a higher score (Green Book, 2013). In addition, T-test was conducted into this research to test a significant difference between product, price, place and promotion.

CHAPTER 4 DATA ANALYSIS

This chapter presents the result of the data collected from the respondents.

Personal information

Table 1: Personal information