Do New Luxury Hotel Promotions Harm Member Customers?

Abstract

Will customers regret their loyalty to a hotel and look for alternatives if the hotel neglects to communicate with them? Empirical research on this question is limited in the hospitality literature. To accurately determine the direction of future customer behavior, we investigate the impact of sales promotions on customer regret and switching intention, demonstrating that sales promotions can dilute customer loyalty. Using an experimental design study (n = 227) in Korea, our findings indicate that sales promotions have no effect on customer regret and switching intention. In particular, we find that customers’ regret of paying for a hotel membership is more salient than their regret of obtaining a free membership in the new luxury hotel context, regardless of the absence or presence of sales promotions. Moreover, the findings show that VIP club members tend to experience more regret and have greater switching intentions than free online membership customers. The higher the degree of customer regret, the more sensitive the customers’ reactions are to mixed promotions, leading to a rapid increase in switching intentions among customers. This study expands sale promotion knowledge by offering ample evidence of customer behavior and provides sustainable insights for hospitality managers responding to member customers’ demands.