Factors influencing willingness of customers of environmentally friendly hotels to pay a price premium

Abstract

PurposeThe 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/approachThe theoretical framework comprises both social identity theory and value-belief-norm theory. The data were collected through a survey of 454 customers staying at eco-friendly hotels in Spain. The research model is tested by using a structural equation modelling approach.FindingsThe 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’ eco-friendly image and the environmental practices.Research limitations/implicationsThe 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/valueThe 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.