Tourism Review

Hotel discount strategies on consumer responses: the role of involvement

Seung Hyun Lee Billy Bai

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Seung Hyun Lee Billy Bai , (2014),"Hotel discount strategies on consumer responses: the role of involvement", Tourism
Review, Vol. 69 Iss 4 pp. 284 - 296
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Hotel discount strategies on consumer

responses: the role of involvement

Downloaded by Biblioteca Centrala Universitara Lucian Blaga At 01:18 15 December 2014 (PT)

Seung Hyun Lee and Billy Bai

Seung Hyun Lee is based

at Rosen College of
Hospitality Management,
University of Central
Florida, Orlando, Florida,
USA. Billy Bai is based at
William F. Harrah College
of Hotel Administration,
University of Nevada
Las Vegas, Las Vegas,
Nevada, USA.

Abstract
Purpose This paper aims to examine the impact of hotel discount strategies on consumers emotional
and behavioral responses in the presence of differential levels of involvement in discount acquisition.
Design/methodology/approach Discount strategies and the high- and low-involvement variables
were fully cross-examined, yielding a 2 2 factorial quasi experimental design. In all, 120 surveys were
collected, and multivariate analysis of variance was used for data analysis.
Findings The results suggest that fenced discounts that require consumers to accept restrictions to
receive a discount generated more positive emotion and stronger behavioral intention. Moreover, an
interaction effect was found between consumers involvement and discounts on emotional and
behavioral responses toward discount-acquiring experience. Highly involved consumers resulted in
more positive emotional and stronger behavioral responses (e.g. pride, gratitude, word-of-mouth and
retention) from obtaining a fenced discount that requires consumers efforts or sacrifices. On contrary,
consumers with low involvement tend to appreciate more of a fixed discount given to anyone without
restrictions.
Practical implications Hotels should implement a fenced discount when they design discounts
targeting at high-involvement consumers. For low-involvement consumers, a fixed discount appears to
generate more positive emotion and stronger behavioral intention.
Originality/value The study enhances the theoretical understanding of consumers emotional and
behavioral responses toward discount-acquiring experience with different levels of involvement.
Keywords Involvement, Hotels, Revenue management, Discounts, Rate fence
Paper type Research paper

1. Introduction
The hospitality industry has increasingly employed revenue management, as its inventories are
perishable, demand can be segmented, the products or services are sold well in advance and
demand fluctuates substantially (Gayar et al., 2011; Jauncey et al., 1995; Kimes, 1989;
Lee-Ross and Johns, 1997; Okumus, 2004). Such characteristics have enabled the hospitality
industry to manipulate and yield profits corresponding to real-time demand and to capture
optimum revenue (Netessine and Shumsky, 2002). In revenue management, properly
designed pricing helps consumers self-segment on the basis of willingness to pay and
differentiate the price (Maier, 2011; Wirtz and Kimes, 2007). Differential pricing is designed to
fence consumers into different market segments. Fenced rates make it difficult for the
consumer to wander from one market segment to another. In particular, hotels often employ
fenced rates by including restrictions on the purchase pattern such as advanced purchase and
minimum usage requirement (Zhang and Bell, 2012). Hotels offer a set of prices and
consumers self-select from the set by accepting certain restrictions on their purchase and
consumption experiences (Kimes and Wirtz, 2003).
Received 7 April 2014
Revised 7 April 2014
Accepted 8 April 2014

PAGE 284 TOURISM REVIEW

Room rates can be framed either as discounts or surcharges (Wirtz and Kimes, 2007). If
consumers perceive prices framed as gains (e.g. discounted rates), they evaluate their
purchase experience as gains (Kahneman and Tversky, 1979; Nunes and Park, 2003;

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DOI 10.1108/TR-04-2014-0014

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Thaler, 1985; Wirtz and Kimes, 2007). When a price is framed as a discount, consumers are
expected to acquire positive emotion about the purchase, and their willingness to spread
the word and come back to the firm tends to increase (Folkes, 1988; Ingenbleek, 2007;
Schindler, 1989). The question that remains unanswered is whether the degree of positive
reactions in discount acquisition is the same regardless of how the discount is designed.
In this study, two discount situations were proposed: a fenced discount situation where
consumers are required to make efforts or sacrifices to receive a discount versus a fixed
discount situation where a discount is given to any consumers without efforts or sacrifices.
Such discount strategies are common in the hospitality business, but few scholars have
paid a close attention on different fencing conditions (Zhang and Bell, 2012). Hotel
consumers emotional and behavioral reactions were proposed to be different based on
differential discounts-acquiring experiences.
In addition, consumers involvement levels play a significant role in evaluations of emotion
and behavior associated with a particular consumption (Baker et al., 2009). Therefore, the
purpose of the study was to examine the impact of hotel discount strategies on consumers
responses. Specifically, an experiment was designed to investigate how consumers
evaluate different discount situations and how different levels of consumer involvement
impact the emotional and behavioral responses to a discount-acquiring experience.

2. Literature review
2.1 Differential pricing
Most hotels use differential pricing in revenue management (Gayar et al., 2011; Jauncey
et al., 1995; Kimes, 1989; Okumus, 2004; Taylor and Kimes, 2010). The main objective of
revenue management is to maximize revenue by charging multiple prices for the same
product or service. Compared to having one price, offering different price points generates
more revenue, assuming costs and numbers of consumers remain the same. Beyond the
point where costs have been covered, potential profits increase as the number of price
points increases, described in Figure 1 (Sahay, 2007).
To have different price points, hotels segment their consumers into different groups.
Revenue management is thus grounded on distinguishing features of market segmentation.
Once the market is segmented, different prices can be specifically designed for certain
groups. For example, consumers with young children are expected to pay a certain price
to stay at a Disney hotel due to the uniqueness of having a theme park on the property.
Therefore, the Disney hotel is not willing to offer discounted rates to such a group of
consumers (Duman and Mattila, 2004). Discounted prices should be explicitly designed for
those who are more price-sensitive and would not purchase the room otherwise (Philips,

Figure 1 Effectiveness of differential pricing in revenue management

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1981; Zhang and Bell, 2012). However, the price difference between market groups may
motivate some consumers to switch segments and take advantage of discounted rates. To
preserve market segmentation and limit spillovers between market segments, hotels use
various fenced conditions and restrictions to maintain the separation of the price categories
(Hanks et al., 1992, 2002; Zhang and Bell, 2012).
2.2 Framing and emotional and behavioral responses to discounts

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Consumers evaluate their purchase experience relative to a reference point (Kahneman

and Tversky, 1979). Framing effect arises as consumers respond differently to varying
presentations of the same price (Biswas and Grau, 2008; Weiner, 1985). The way a price
is framed affects consumers evaluation of their purchase (Chen et al., 1998; Nusair et al.,
2010). According to the prospect theory, people respond to changes in wealth or prospect
(Nunes and Park, 2003). The amounts of money paid define gains and losses; the reference
point is taken to be the status quo (Kahneman and Tversky, 1979). When a price is framed
as a discount (e.g. gain), consumers perceive their purchase experience as a gain,
consequently leading to positive reactions toward the experience.
From discount-acquiring experiences, consumers develop positive emotions toward a
particular firm, spread positive word-of-mouth and come back to the firm (Folkes, 1988;
Ingenbleek, 2007; Schindler, 1989). Because price is generally viewed as complete or
fixed, consumers receiving a discounted price also appear to achieve emotional rewards
such as feelings of pride, intelligence or competence (Bandura, 1977; Holbrook et al.,
1984; Schindler, 1989). Consumers feel accomplished or thrilled, and in a small way
victorious over large corporations, when they obtain discounts (Rose, 1988).
Consumers also see themselves as efficient, effective, responsible and cognitive when they
make a decision which results in a good outcome (Babakus et al., 1988; Schindler, 1989; Shimp
and Kavas, 1984). Other effects such as hedonic enjoyment and feeling like a smart shopper
have also been found in promotion research (Schindler, 1989). In response to emotional
rewards, purchase intentions will increase when consumers perceive themselves as paying a
good price for the benefits obtained (Ingenbleek, 2007). Consumers who feel proud about the
price they pay are more likely to brag about their consumption experience, and thus spread
more information about the purchase (Folkes, 1988; Schindler, 1989).
In relation to emotion and behavior with revenue management strategies, most hospitality
studies were limited to fairness (Choi and Mattila, 2009; Kimes, 2002; Sahay, 2007).
Consumers view a revenue management situation as unfair when they pay more for a
similar service and cannot perceive a difference in the service. If consumers perceive
revenue management as unfair, the increased revenues resulting from revenue
management may only be short-term (Kimes, 2002). The perception of fairness depends on
the amount of information disclosed to consumers (Choi and Mattila, 2009; Kimes, 2002).
Fenced situations contain different pricing information exposed to consumers, and different
prices charged for the same products and services are thus perceived to be different.
2.3 Involvement
The concept of involvement has been well-studied in consumer research. Howard and
Jagdish (1969) defined involvement as a general level of interest in an issue without
reference to a specific position. Researchers often use the outcome of behaviors as
indicators of the level of involvement (Zaichkowsky, 1985). Involvement is measured by the
time and energy spent on the product search, the number of alternatives examined and the
extent of the decision process (Engel and Blackwell, 1982; Schindler, 1998; Stone, 1984).
Individuals differ in the extent of their decision process and their search for information
based on their level of involvement (Zaichkowsky, 1985). While some consumers actively
search for and use information to make decisions, others are not as much as involved in an
extensive search for information or a comprehensive evaluation of the choice alternatives

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(Olshavsky and Granbois, 1979; Zaichkowsky, 1985). Researchers often view consumer
behavior in terms of a two-fold dichotomy: low- and high-involvement consumer behavior
(Engel and Blackwell, 1982; Kim et al., 2012; Zaichkowsky, 1985). High-involvement
consumers are viewed as those individuals who are highly active, information processing
beings, trying to gain as much information as possible, who then use this information in
attempting to arrive at the optimal choice (Muncy and Hunt, 1984). On the other hand,
low-involvement consumers are interested in minimizing the physical and psychological
efforts required to obtain a product, and they show fairly passive decision-making
processes (Farahmand and Chatterjee, 2008; Muncy and Hunt, 1984).
Previous studies have explored the power of involvement in explaining and predicting
consumer behaviors (Baker et al., 2009; Beldona et al., 2010; Varki and Wong, 2003).
Involvement influences satisfaction and purchase decisions (Celsi and Olson, 1988). In most
cases, the relationships between involvement, satisfaction and purchase decisions are
stronger for consumers with higher involvement. The attribution dimension employed in
consumer research is the concept of locus of causality (Folkes, 1988). A consumer who
attributes the cause of a good purchase to internal factors (e.g. own ability or effort) will exhibit
higher satisfaction than a consumer who attributes a good purchase to external causes (e.g.
agents recommendation or by accident). For example, when customers achieve discounts
after hours of searching or after accepting certain restrictions, positive reactions of consumers
emotion and behavioral intension were more apparent, because they earned the discount.
Based on the above literature review, the following hypotheses are proposed:
H1a. High-involvement consumers have more positive emotional responses to a
discount-acquiring experience compared to low-involvement consumers.
H1b. High-involvement consumers have stronger behavioral responses to a
discount-acquiring experience compared to low-involvement consumers.
A fenced discount requires consumers to accept certain restrictions in an effort to receive
a discount. A fenced discount is not offered automatically to all consumers. Rather, a
fenced discount is perceived as a tradeoff in exchange for their inconvenience.
Inconveniences include making reservations in advance, agreeing to a no refund/change
policy, cancellation penalties or minimum days of stay. Consumers make a choice over
price options, so the discounts are given only to those who are willing to take these risks.
Hotel consumers are allowed to receive specific discounts if they accept certain restrictions
(Kimes, 2002). On the other hand, a fixed discount can be given to any consumers without
consumers efforts or sacrifices. For example, during the recession in 2009, one of the
hotels in Las Vegas offered $39 rate to all reservations. This discount does not require
consumers contribution to the deal, and all customers receive the same amount of
discounted rate at a specific time.
Consumers who obtained a discount not received by everyone else experience an enhanced
smart-shopper feeling (Schindler, 1998), which enriches their emotional and behavioral
reactions toward the purchase. Attribution theory (Kelley, 1967) supports that the different
levels of involvement a consumer attributes to a discount can be related to a consumers
evaluation of discount strategies. A consumer who attributes the cause of a discount to
internal factors will exhibit higher emotion and behavioral intention than external factors. Thus,
consumers efforts to acquire a discounted rate lead to stronger reactions, as consumers obtain
the deal. Therefore, the following hypotheses are formulated:
H2a. Consumers show more positive emotional responses to a discount situation that
requires consumers inputs.
H2b. Consumers show stronger behavioral responses to a discount situation that
requires consumers inputs.
Not every customer appreciates fluctuating rates. In particular, low-involvement consumers
do not seem interested in seeking a deal and accepting restrictions in exchange of a
discount. Low-involvement consumers may prefer a static discount where everyone pays

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the same price. Some travelers are skeptical of fluctuating rates, and they prefer the
simplicity of a known, fixed discount that is not subject to any changes (Eisen, 2006). On
the other hand, high-involvement consumers enjoy the participation and involvement of the
pricing process, so they respond more to a fenced discount that requires consumers
involvement in pricing process. By involving such high-involvement consumers in the
pricing process, firms are able to create stronger emotional and behavioral reactions to a
discount from the consumers. Consequently, the following hypotheses are recommended:
H3a. High-involvement consumers show more positive emotional responses toward
acquiring a fenced discount, whereas low-involvement consumers prefer a fixed
discount.
H3b. High-involvement consumers show stronger behavioral responses toward
acquiring a fenced discount, whereas low-involvement consumers prefer a fixed
discount.

3. Methodology
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3.1 Research design

An experimental study was conducted to examine the impact of discount and involvement
levels on consumers emotions and behavior. In this study, the discount situation is
presented in two ways where consumers put some efforts into receiving specific benefits
by accepting certain restrictions when booking a hotel room, and a fixed discount is given
to anyone who makes a hotel reservation at a certain period. Therefore, discount strategies
and the high- and low-involvement variables were fully cross-examined, yielding a 2 2
factorial quasi experimental design.
A two-page survey instrument included five questions for each scenario regarding
respondents emotional and behavioral responses toward a discount, 20 questions on the
levels of involvement in obtaining a discount and three questions for demographic
characteristics. Scenarios were modified from the studies by Kimes (2002) and Choi and
Mattila (2009). The manipulation was accomplished by creating a set of scenarios that describe
the respondent receiving a discount under two different circumstances (Schindler, 1998). The
following scenario describes a discount-acquiring experience that requires consumers to take
a restriction (e.g. advanced purchase) to receive a discounted rate:
Imagine that you travel to Las Vegas for leisure purpose. You booked one standard room with
a king-size bed in a mid-priced hotel for one night. Later, you start having a conversation with
someone who is sitting next to you in the restaurant. Your room is identical to his or hers, and
those rooms are next to one another. The going price for the room is $150 per night. [It seems
that the person paid $150 for the room, but you paid only $100. You made a reservation 30 days
before arrival, and he or she made a reservation the day before].

In the other scenario, the discounted rate and purchase date were controlled and other
conditions remained identical to the above scenario (e.g. you both paid $100 for a room
and made a reservation the day before). The length of stay was held constant as a
one-night stay. The purpose of the trip was for leisure, and the product was a king-size
bedroom at a mid-priced hotel. Business travel was excluded from the study, for business
travelers tend to have less control over making hotel reservations because their companies
often negotiate room rates with hotel partners.
3.2 Measurement development
Five questions served as dependent variables regarding how a respondent felt as the
protagonist of the scenario and how they responded after receiving the discount: good
feelings (1 felt ok, but not especially good; 7 felt really good), pride, gratitude,
word-of-mouth and retention (1 strongly disagree; 7 strongly agree) (Schindler, 1989).
Questions concerning good feelings, pride and gratitude were explored to describe
emotional responses. Word-of-mouth and retention were used to measure behavior

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VOL. 69 NO. 4 2014

responses to a discount-attaining experience. Each question was measured by using a

7-point Likert scale (1 strongly disagree; 7 strongly agree).
To measure a consumers involvement of price promotion, Zaichkowsky (1985)s Personal
Involvement Inventory (PII) was used. PII is a semantic differential scale and offers a
comprehensive collection of measurement scales from many different areas of marketing.
Respondents were asked to judge against a 7-point scale whether they perceived
receiving a discount is important, relevant, means a lot to the respondent, valuable,
interesting, appealing, needed, of concern to the respondent, useful, fundamental,
beneficial, matters to the respondent, interested, significant, vital, exciting, fascinating,
essential, desirable, wanted or vice versa. The questionnaire was pretested on a sample of
30 respondents to check on the design of the questionnaire and the quality of measures
used. Final wordings were changed and clarified based on the respondents comments.

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3.3 Data collection

The convenience sample was obtained from patrons at a caf inside a courthouse in a
Southwestern metropolitan city in the USA in April 2010. Researchers obtained permission
from the caf restaurant, and sought voluntary participation. Researchers were present at
all times to explain procedures and provide instructions. A total of 200 surveys were
distributed and 120 usable surveys were received and used for data analyses, yielding a
response rate of 68.5 per cent.

4. Results
4.1 Sample characteristics
As shown in Table I, 60 per cent of the respondents were male and 40 per cent were
female. Also, 21 per cent of the respondents age ranged between 18 and 24 years old, 37
per cent of them were 25-34 years old, 14 per cent of them were 35-44 years old, 25 per
cent of them were 45-54 years old and 3 per cent of them were 55-64 years old. In terms
of education levels, the majority of respondents had at least some college level of
education or higher (79 per cent).
4.2 Main effects on emotional and behavioral responses
PII was used to classify respondents into two groups on the basis of their involvement
scores (Varki and Wong, 2003). Internal consistency was shown to be highly reliable

Table I Sample profile

Category

Frequency

(%)

Gender
Male
Female

72
48

60
40

Age
18-24
25-34
35-44
45-54
55-64

25
44
17
30
4

21
37
14
25
3

Education
High school
Some college
Two years college
Four years college
Masters degree
Doctoral degree
Others

23
24
15
29
9
11
9

19
20
13
24
8
9
8

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PAGE 289

( 0.915). Respondents were divided into two groups according to their levels of
involvement in obtaining a discount. Involvement responses ranged from 20-140. By the
median split, the top 60 responses were classified as high-involvement consumers
(115-140 scores) and the bottom 60 as low-involvement consumers (20-114 scores).
Involvement scores were significantly different between low and high groups (Involvement
scoreL 93.12 vs Involvement scoreH 130.10, t 14.334, p 0.001).
Multivariate analysis of variance was used to test the proposed hypotheses. Average
scores of emotion variables ( 0.894) and behavior variables ( 0.787) were used for
data analysis. Assumptions were tested and met the requirement: the error terms were
independent from each observation and normally distributed with zero mean and the same
variance ; variances of different samples were homogeneous; and variances and means
of different samples were not correlated. The multivariate analysis of covariance procedure
examined the main and interaction effects of the two independent variables on emotion and
behavior (discounting: Hotellings Trace: F 8.407, p 0.001; involvement: F 2.836,
p 0.063; discounting involvement: F 8.503, p 0.001).
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A significant difference between low- and high-involvement consumers was observed on

emotion and behavior in response to a discount-acquiring experience. High-involvement
consumers scored higher on emotion (ML 4.28 vs MH 4.92, p 0.05) and behavioral
intention (ML 4.45 vs MH 5.15, p 0.05). Therefore, H1a and H1b were supported that
high-involvement consumers show more positive emotional and stronger behavioral
responses when facing discount situations.
In addition, a significant main effect on respondents emotional and behavioral responses
between two discount situations was found. Mean scores for the scenario using a fenced
discount that required consumers efforts or sacrifices (F) were significantly higher than
those for a discount that was given to anyone (NF); emotion (MF 5.19 vs MNF 4.01,
p 0.001) and behavioral intention (MF 5.12 vs MNF 4.48, p 0.05) (Table II).
Therefore, H2a and H2b were supported that consumers show more positive emotion and
stronger behavioral responses, respectively, when facing a fenced discount that requires
a consumers inputs.

4.3 Interaction effects and simple main effects

The results revealed statistically significant interactions between discounting and
involvement on emotion and behavior (emotion: F 17.039, p 0.001; behavior: F
10.718, p 0.05) (Table III). Involvement moderates the relationship between discounting
and emotional and behavioral responses. Interaction effects were shown in Figure 2. A
follow-up test on simple main effects was conducted for each discount situation. For the
fenced discount situation with a consumers inputs, differences existed between

Table II Main effects on dependent variables

Variables
Involvement
Emotion
Behavior

Discounting
Emotion
Behavior

Low involvement
M

High involvement
M

4.28
4.45

4.92
5.15

4.600
5.277

0.034*
0.023*

Fence
M

No fence
M

5.19
5.12

4.01
4.48

15.521
4.399

0.001**
0.038*

Notes: *p 0.05; **p 0.001

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Table III Simple main effects on involvement

Involvement
Low
Emotion
Behavior
High
Emotion
Behavior

Discounts

Mean

SD

Fenced discount
No fence
Fenced discount
No fence

4.25
4.31
4.27
4.63

1.68
1.69
1.67
1.34

0.128

0.898

0.897

0.373

Fenced discount
No fence
Fenced discount
No fence

6.12
3.72
5.96
4.33

1.09
1.86
1.22
2.11

5.930

0.001**

3.557

0.001*

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Note: *p 0.05; **p 0.001

involvement levels in obtaining a discount and respondents emotion (ML 4.25 vs MH

6.12, p 0.001) and behavior (ML 4.27 vs MH 5.96, p 0.001) (Table III).
Simple main effects for each level of involvement were also captured. Among respondents
with high involvement in obtaining a discount, significant different scores between discount
situations were found: emotion (MF 6.12 vs MNF 3.72, p 0.001) and behavioral
intentions (MF 5.96 vs MNF 4.33, p 0.05) (Table IV). In summary, differential
involvement levels were found to moderate consumers responses to different discounts.
Only those consumers who are highly involved in obtaining a discount experience stronger
responses from a discount that requires their inputs, while they show less appreciation of
a discount that is given to anyone.

5. Discussion
In an effort to understand hotel consumers emotion and behavior when obtaining a price
framed as a discount, this study explored the influence of different levels of involvement on
consumer reactions in different discount situations. Two discount situations were compared: a
discount situation where consumers were required to make efforts or sacrifices to receive a
discount versus a discount situation where a discount was given to all consumers without any
efforts or sacrifices. The results showed that consumers highly involved in obtaining a discount
are more likely to show behavioral intentions (e.g. tell others and come back to the property),
confirming previous studies (Folkes, 1988; Ingenbleek, 2007; Schindler, 1989).
High-involvement consumers appreciated a discounted rate more and they were more likely to
spread the word and show intention to come back to the hotel.
Moreover, fenced discounts triggered more positive emotion and higher behavioral intentions
in comparison to fixed discounts. Consumers have become familiar with revenue management
strategies in the hospitality industry. They also are aware that they occasionally receive
discounted rates. Consumers thus take a fixed discount for granted. But when some efforts or
sacrifices are made to receive a fenced discount, consumers show emotional achievement and
behavioral intention over securing a discounted rate.
Results of the study also showed that there is a significant interaction between the levels of
consumers involvement in obtaining a discount and discount types. Consumers highly
involved in a discount are apt to demonstrate more emotional and behavioral responses
from a fenced discount that requires consumers inputs to receive a discount. This result
supports the notion that the more they attribute the outcomes cause to their own actions,
the more consumers experience positive feelings from the outcome (Schindler, 1998).
5.1 Theoretical implications
The study provides important implications both theoretically and practically. It
examined the impact of hotel discount strategies on consumers emotional and

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Figure 2 Interaction effects

behavioral responses in the presence of differential levels of involvement in acquiring

a discount. Discounts and involvement were combined into one study, and emotion and
behavior were simultaneously observed, although this study was a confirmation of
previous studies in nature.

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Table IV Simple main effects on discounts

Discounts
Fenced discount
Emotion
Behavior
No fence
Emotion
Behavior

Involvement

Mean

SD

Low
High
Low
High

4.25
6.12
4.27
5.96

1.68
1.09
1.67
1.22

4.993

0.001**

4.384

0.001**

Low
High
Low
High

4.31
3.72
4.63
4.33

1.69
1.86
1.34
2.11

1.274

0.208

0.632

0.530

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Note: **p 0.001

Understanding a consumers value perceptions such as satisfaction, pride and other positive
feelings in relation to revenue management is critical. Recent revenue management studies
have paid more attention to investigating the relationship between revenue management and
consumers (Cross et al., 2009; Ivanov and Zhechev, 2012). Such customer-focused approach
tracks purchase patterns and targets promotions based on understanding of consumers
responses to offers. Beyond the monetary value, room rates affect consumers perceptions
(Schwartz and ChihChien, 2010). The study enhances the theoretical understanding of
consumers emotional and behavioral responses with different levels of involvement, and,
consequently, the effectiveness of hotels revenue management policies.
As the concept of consumer involvement plays a significant moderating role, it is imperative
to study this linkage of differential involvement and consumers preferences on discount
strategies. On a broader scale of behavioral pricing, this study confirms that consumers
react differently to various pricing stimuli. Our results support that individual consumers
show different reactions to the pricing of the same product in different situations, channels
and occasions of use (Campo and Yague, 2007; Kimes, 2002). In acquiring a discount that
requires consumers inputs, consumers attribution resulted in higher emotional reaction
and behavioral intention, confirming attribution theory (Kelley, 1967; Schindler, 1998).
5.2 Practical implications
From a practical standpoint, the following recommendations are made to hoteliers in managing
consumer responses with discount strategies. Hoteliers are advised to design discount
strategies with care, as consumers with different levels of involvement show different reactions
toward a discount: good feeling, pride, gratitude, word-of-mouth and retention.
Hotels are recommended to implement a fenced discount that requires consumers efforts
or sacrifices when they design discounts targeting high-involvement consumers. Fenced
discounts lead high-involvement consumers to a greater sense of achievement and
excitement and further increase behavioral intentions. If a discount is given without fenced
conditions, high-involvement consumers receive a discount that they take for granted. It
may be the case that a consumer who always seeks deals always receives deals, so
receiving a discounted room rate does not make them feel especially good about it unless
they actively contribute to the deal. A best practice to segment and to target
high-involvement consumers is a fenced discount because high-involvement consumers
will participate in obtaining a discount by making advanced booking, accepting no refund/
change policy and minimum lengths of stay.
Low-involvement consumers appear to have more positive responses from a discount
situation given to anyone. Low-involvement consumers tend to have a lower appreciation
for fenced discounts. For example, business travelers are less likely to be involved in
obtaining a discount. Therefore, business hotels should use a fenced discount with caution
because a rate fence system can lead to more confusion and less satisfaction. Therefore,

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when formulating discount promotions, hotels should segment and target the market
effectively and apply appropriate discounting strategies.
5.3 Limitations and future study

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Our study has some limitations that point toward directions for future research. First, this
study was conducted based on scenarios. Second, this method solely relies on the
respondents who use their own feelings and reactions as a guide to judge the feelings and
reactions of others (Hoch, 1988). There is a possibility that emotions and behaviors about
receiving discounts can be influenced by other factors, such as room temperature, noise
level at the caf or simply mood. Therefore, future study should consider the true
experiments with actual situations. Third, while the general approach for this study was
valid (e.g. actions carefully taken from the results from pilot study), the use of a certain price
reduction may produce different perceptions of a discount. For example, differential effects
of promotion frame may yield different perceptions of savings (DelVecchio et al., 2007), that
is, the amount of price discount versus price percentage deduction in this study. It is
recommended that such effects be controlled in future studies.
Fourth, the convenience sample was used due to limited resources and time. Generalizability
of results should be interpreted with caution. If time and conditions were permitted, random
sampling is most ideal, and data collection can be implemented across a longer period. Fifth,
five questions were asked to indicate emotional and behavior scores, replicating Schindlers
(1989) study. Different measurement items can be used to capture emotion and behavior
during a consumption experience. In particular, the concept of emotion is multifaceted and
complex. Future studies are recommended with more elaborate scales solely on the affective
dimensions of promotion such as the Promotion Affect Scale (Honea and Dahl, 2005).
Finally, involvement was used to segment consumers into low- and high-involvement
groups that encouraged different promotional strategies. However, involvement scores
could also be used as continuous data. By doing so, future studies can utilize other
statistical techniques such as regression analysis to measure the magnitude of the
difference of customers responding to discount pricing strategies.

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Corresponding author
Seung Hyun Lee can be contacted at: seunghyun.lee@ucf.edu

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