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Business Services Industry

A study of the functionality of hotel websites in mainland China and the United States

Journal of the Academy of Business and Economics, Jan, 2004 by Rob Law, Daniel Ho, Catherine Cheung

ABSTRACT

This paper reports on a study that applied the newly developed technique of measuring the incremental performance of websites to evaluate the websites of hotels in mainland China and the United States. On the basis of a conceptual framework that includes five dimensions of functionality, sixty hotel websites in mainland China and the U.S. were evaluated. The empirical findings indicate that the websites of the hotels in the U.S. significantly outperform their mainland China counterparts in four of the five dimensions. In addition, the overall performance score for hotel websites in mainland China is significantly lower than the corresponding number for the websites of hotels in the U.S.

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1. INTRODUCTION

The Internet has been changing the life styles of people, from methods of searching information to purchasing products and services. E-commerce, in particular, has become an essential part of Internet applications (Cox, 2003). In the United States, almost two-thirds of Internet users have made online purchases (Ipsos, 2002). In the context of the hotel industry, given the dramatic growth of the Internet, hotel guests and lodging companies can largely rely on the Internet as a major medium for the dissemination of information and for conducting online transactions (Jeong and Lambert, 2001).

Internet applications offer many advantages to the hotel industry. Morrison, Taylor, Morrison, and Morrison (1999) pointed out that web materials are available in various formats and languages, and with no geographical or time limitations. Hoteliers can therefore effectively pursue niche markets on the web and can substantiate their unique differences on their websites through the use of photographs, text, graphics, animation, testimony, awards, and other means. Hotels can also provide special offers or deals to online customers by offering information related to the needs and interests of their customers. Small hotels can compete in cyberspace by forming an unlimited number of Internet alliances on the web through reciprocal hyper links. In short, having a web presence brings benefits to hotels in the form of lower distribution costs, revenue growth, niche marketing, improved customer satisfaction and increased customer loyalty, improvements in quality, and the ability to address other critical business or customer needs (Morrison et al., 1999).

A hotel website is not only a place where a company places information about its products and services; a website also has a commercial value in terms of helping a hotel make a profit (Law and Leung, 2000). At present, many hotels have established online reservation systems so that online users can book hotel rooms directly from the Internet. Well-designed websites, with useful information provided to customers and extra benefits available to customers when using the online systems, can help increase sales volumes and improve the reputation of a hotel. If online users do not consider a hotel's website to be useful, the resources that were invested in creating the site will be wasted. More importantly, a negative impact could result if customers are not satisfied with the hotel's Internet services.

Although many hospitality researchers seem to realize the importance of the Internet for a hotel's business strategy, only a limited number of studies have been conducted to examine hotel websites, especially the contents and features that hotels are implementing on their websites. This research attempts to investigate and evaluate the functionality performance of hotel websites, and to examine the contents of websites in the hotel sectors of mainland China and the United States, the regions with the fastest growth in Internet applications in the world. Specifically, the primary objective in this research is to measure the performance of selected hotel websites in mainland China and the U.S., and to compare and contrast their contents. The newly developed technique of measuring the incremental performance of websites (Chung and Law, 2003; Law and Chung, 2003) is used in this study to evaluate the websites. Following the definition of Lu and Yeung (1998), functionality relates to the extent to which a website provides sufficient information about the products/services being promoted.

Mainland China is chosen in this study because of the tremendous rate at which the Internet has grown in this region. In 1999, the population of Internet users in mainland China was about four million in a country of 1.25 billion people (Runckel and Associate, 1999). In 2001, this figure was 33.7 million--the world's fastest growth rate (eTForcasts, 2003).

The United States is included in this study because of its leading position in Internet applications. In 2001, there were 148.9 million Internet users in the United States, representing more than half of US population (eTForcasts, 2003). The United States leads the world in Internet use, with 72% of American adults having had some online experience (Ipsos, 2002). In 2002, more than one-third of Americans used the Internet to search for information on products and services, up from 26% in 2000; and 39% of these Internet users made online purchases (CyberAtlas, 2002; eTForecasts, 2003).

Business Services Industry

A study of the functionality of hotel websites in mainland China and the United States

Journal of the Academy of Business and Economics, Jan, 2004 by Rob Law, Daniel Ho, Catherine Cheung

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