Brand Equity, Perceived Value and Revisit Intentions – an Evidence from the Hotel Industry

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CHAPTER - I INTRODUCTION 1.1 INTRODUCTION
Both the domestic and foreign arrivals have shown a rapid increase with India emerging as a vibrant and varied tourist destinations. The domestic tourism industry grew at a rate of 10.7 % in whereas foreign arrivals at 8.1% in 2010 (Indian Tourism Statistics,2010). To feed this splurge in arrivals hotels are booming across India and this most importantly has not been restricted to just metros. Even second tier cities like Bhopal, Amritsar, Surat, Ranchi etc are being looked upon as potential feasible destinations of upscale star brands. The hotel industry in India can be divided into eight segments based on the norms set by the Ministry of Tourism. They are 5-Star Deluxe, 5-Star, 4-Star, 3-Star, 2-Star, 1-Star, Heritage and Unclassified. However, the 3-star, 2-star, 1star and unclassified hotels in India are spread across the length and breadth of the country and are highly fragmented in nature, whereas, the upscale, mid market and heritage categories are highly organized. Domestic tourist arrivals are the backbone of Indian Hotel Industry as the number of Domestic Tourists is more than 100 times (Indian Tourism Statistics, 2010) as compared to Foreign Tourists. Domestic tourists are of 2 types, Leisure travelers and Business travelers. Growth in leisure travelers is driven by rising personal discretionary income, evolving lifestyle, growing number of multi earner families, weekend vacation culture, improvement in rail, air as well as road connectivity, diverse topography and rich cultural heritage. Drivers of domestic business traveling are rise in trade and commerce, increasing geographical spread of companies, growing MICE culture. Players like Lemon Tree, Ginger have identified that there is dearth of quality rooms in the mid market segment. Entry of organized players is expected to improve the quality of offerings and bridge the wide gap between midmarket and upscale category. The competition in hotels has undergone drastic changes from being dependent on service or price advantages to increasingly relying on brand management. This change has been typically accompanied by the accelerating effects caused by the massive entries of foreign brands into India. Since all hotels basically offer the same products and services customers do tend to rely on established brands or where they have visited for easy selection.

BRAND EQUITY, PERCEIVED VALUE AND REVISIT INTENTIONS

1

As Prasad and Dev (2000) stated, the stronger the hotel brand equity, the more customers will prefer that hotel brand. Brand equity had been widely recognized as the most valuable asset to companies and has become a top management priority since it can more easily retain customer loyalty, launch product extension and be synonym with price premium (Aaker, 1991; Lassar et al., 1995; Keller, 1993). It is due to this fact that hotels prefer acquiring an existing brand for expansion rather than developing a new in-house brand. Example Marriott international took over Ritz-Carlton by adopting an acquisition strategy rather than developing a new luxury segment.

In marketing aspects, building a strong brand yields a number of marketing advantages. This includes greater customer loyalty, higher resiliency to endure crisis, and increased marketing communication effectiveness. Ambler et al. (2002) argued that great effort should be exerted for creating and sustaining customer-based brand equity, in that the recognition of the importance of customers‟ value to a firm‟s asset has been increasing in recent days. Farquhar (1989) argued that the brand has value only if it has meaning to the customer. Cobb-Walgren insisted (1995) that “it is important to understand how brand value is created in the mind of the consumer and how it translates into choice of behavior” (p. 26).

Moreover in India brand equity as concept is very different. Customers may perceive an unclassified hotel to be a stronger brand, which they can...
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