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“LuXurY” Hotel Loyalty – A Comparison of Chinese Gen X and Y Tourists to

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 International Journal of Contemporary Hospitality Management
“LuXurY” hotel loyalty – a comparison of Chinese Gen X and Y tourists to Macau
Fiona X. Yang, Virginia M.C. Lau,
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Issue: 7, pp.1685-1706, https://doi.org/10.1108/IJCHM-06-2014-0275
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“LuXurY” hotel loyalty – “LuXurY”

hotel loyalty
a comparison of Chinese Gen X
and Y tourists to Macau
Fiona X. Yang and Virginia M.C. Lau 1685
College of Tourism, Institute for Tourism Studies, Macao, China
Received 6 June 2014
Revised 30 September 2014
16 December 2014
Abstract Accepted 28 January 2015

Purpose; – This study aims to investigate generational disparities of Chinese Generation (Gen) X and
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Y tourists by examining their loyalty determinants in a luxury hotel setting.

Design/methodology/approach – A survey of five-star hotel guests in Macau yielded 285 complete
responses. Structural equation modeling was used to test the quality-loyalty framework through the
mediating roles of perceived value and satisfaction, with a multi-group comparison to examine
generational differences.
Findings – The results indicate that top quality rooms and services are high on the agenda of both
generations, while Gen X places more weight on convenience and food and Gen Y on security;
satisfaction does not induce loyalty, whereas value fully or partially mediates the quality-loyalty
relationship; and Gen X is value-centered in building loyalty, yet Gen Y exhibits both value
consciousness and stronger demands for upscale quality features.
Practical implications – The findings help hotel managers cater to different generations by
improving determinant attributes of service quality and enhancing hotel value.
Originality/value – The study makes noteworthy contributions to the generational differences of
Chinese tourists and sheds light on future research in tourism and hospitality to explore the
characteristics of young generations.
Keywords Generation Y, Consumer behavior, Luxury hotel, Generation X,
Generational differences, Chinese tourism
Paper type Research paper

1. Introduction
The landscape of outbound tourism has undergone a major transformation over the past
decade, with big spenders in developed countries replaced by those from rising, new
economies. In particular, the growth of Chinese tourists – the largest and fastest growing
outbound tourism market – has drawn worldwide awareness (Cai et al., 2008; UNWTO,
2013). A plethora of studies have examined the underlying motivations, expectations
and behavioral patterns of Chinese tourists and attributed their distinct traits to cultural
factors (Li et al., 2011; Li and Stepchenkova, 2012; Sparks and Pan, 2009). Cultural
differences are indeed akin to generational impacts (Benckendorff et al., 2010), albeit
little research has been conducted from a generational perspective. This gap has
generated a new call for research on generations beyond oversimplified age International Journal of
Contemporary Hospitality
demographics. Management
Generational cohorts differ from age groups in that they are characterized and Vol. 27 No. 7, 2015
pp. 1685-1706
shaped by similar experiences, critical life events and shared socio-economic trends. A © Emerald Group Publishing Limited
0959-6119
particular cohort exhibits unique values that will persist over the lifetime; therefore, it DOI 10.1108/IJCHM-06-2014-0275
 IJCHM possesses distinctive traits that can hardly be replicated by another generation
27,7 (Gardiner et al., 2013). Ramified into widely studied concepts such as Generation (Gen) X
and Generation (Gen) Y, generational distinctions are exploited, mostly in the Western
context, to understand values, attitudes and behaviors of different cohorts.
With recent history filled with key events in economic and political liberalizations,
Gen X and Y in China not only manifest different characteristics from their Western
1686 counterparts but also exhibit distinctive values between themselves (Jin et al., 2014).
Considerably different from Gen X, Gen Y is characterized by their increasing
intelligence, global perspective and optimism (Stanat, 2006). This generation is
emerging as the most powerful financial force and a new research interest (O’Cass and
Choy, 2008). However, the research to date has focused on Gen Y-ers’ luxury goods
expenditure, while less attention has been paid to their perceptions toward luxury
service. The global luxury travel market has witnessed robust growth since 2012, and
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this trend is poised to continue to 2017 (Timetric, 2013). Renowned luxury hotel brands
have reported increasing patronage from Gen X to Y, especially in emerging countries
such as China (EHL, 2013). The average age of Asian luxury consumers is decreasing,
which has inevitably set challenges for hoteliers to deliver the desired service for each
cadre and consequently create customer loyalty.
Crowned as the world’s gaming capital, Macau is one of the top travel destinations for
Chinese big spenders. In particular, Macau’s hospitality sector is predominant by the
luxury hotels, including eight five-star deluxe hotels and nineteen five-star hotels
(MGTO, 2014). Compared with other hotel segments, the luxury hotel sector in Macau
has excelled in providing exceptional services and amenities and has become a major
choice for hotel guests. Of 1.7 million Chinese hotel guests in the second quarter of 2014,
53.7 per cent stayed in five-star hotels [The Statistics and Census Service (DSEC), 2014].
It is in this context that this study seeks to research generational differences of
Chinese luxury hotel guests in Macau. The specific objectives are to identify the
dimensions of attribute-based hotel quality and pinpoint performance improvement
areas for each generation and to examine generational disparities in the antecedents and
consequences of luxury hotel loyalty. The study advances existing literature on
generational behaviors of Chinese tourists and provides managerial insights to luxury
hotel operators.

2. Literature review and hypothesis

2.1 Chinese outbound tourists
China’s outbound tourism has flourished in parallel with its economic development,
political stability and relaxation of travel restrictions. Not only did Chinese tourists
make a remarkable total of 98 million outbound trips in 2013 (an 18 per cent year-on-year
increase), they also spent 129 billion USD on these trips, consolidating their position as
the biggest spenders in international tourism (CTA, 2014; UNWTO, 2013). Recognizing
the growing potential and unleashed demand of this huge market, numerous studies
have attempted to understand Chinese tourists from their cultural background, travel
motivations and perceptions toward different destinations and tourism products (Li
et al., 2011; Li and Stepchenkova, 2012; Sparks and Pan, 2009). Although Chinese
tourists share some fundamental expectations on safety and hygiene, they demonstrate
specific preferences for itineraries, accommodations and food. Their price/value
consciousness also creates a high expectation of value for money (Zhang and Murphy, 2009).
 Furthermore, they are apt to build loyalty to a destination with higher degrees of “LuXurY”
familiarity (Sun et al., 2013). They also appreciate their cultural norms and values being hotel loyalty
included in hotels and restaurants and expect service providers to accommodate their
lifestyles and tastes (Chang et al., 2010; Li et al., 2011). Additionally, Chinese hotel guests
are highly concerned about convenience, courtesy and professionalism of staff, room
quality and food variety (Tsai et al., 2011).
1687
2.2 Gen X and Y in China
Generation is defined as a group of people who share proximities in age, residence and
similar experiences in critical historical or development stages (Benckendorff et al.,
2010). Generational theory postulates that not only the age but also the formative years
of individuals have distinctive impacts in shaping their outlooks and behavior patterns
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(Gardiner et al., 2013). Despite the extensive research on generational characteristics in

the Western world, the traits studied in the Western context are somewhat different
from those in China. It was only in the early 1980s that Chinese people were allowed to
have limited excursions to nearby destinations and outbound travel began to take
embryonic form in China (Arlt, 2006). Hence, travel attitudes and behaviors are assumed
to be different among Chinese tourists who were raised before and after the 1980s. In line
with existing studies and previous discussions, Gen X in China is defined as individuals
born between 1965 and 1979 and Gen Y between 1980 and 1995 (Erickson, 2009; Zopiatis
et al., 2012).
Gen X-ers in China are individuals who were mostly born during the mass
propaganda era of the Cultural Revolution. China’s Gen X-ers, currently in their mid-30s
to 50s, may still have faint memories of famine, political instability and twisted social
values during their early childhood. Therefore, they are excited with the developments
of the nation and the influx of new information, as well as the academic and economic
opportunities. They are a pragmatic and hard-working generation that has emerged as
the first middle class in China (Erickson, 2009).
Gen Y-ers in China, also known as the Post-80s, are individuals born after the
promulgation of the One-Child Policy and are now approaching adulthood up to their
early thirties (Stanat, 2006). They are cosseted and pampered by their parents and
grandparents and tend to perform better academically to fulfill the family expectations.
Despite their high intelligence level, Gen Y-ers in China are also perceived to be
ambitious, demanding and allergic to criticism (Lynton and Thøgersen, 2010). In short,
Gen Y in China is “characterized by its optimism for the future, newfound excitement for
consumerism, entrepreneurship, and acceptance of its historic role in transforming
modern China into an economic superpower” (Jin et al., 2014, p. 618).
Chinese Gen X and Y tourists exhibit distinct traits pertaining to their unique
experiences. As the fresh troops of the “New Chinese Tourist”, Gen Y-ers are more
English-literate and keen to engage in in-depth tours to exotic locations (Arlt, 2013).
They are also active in seeking and sharing travel information through online forums
and social media. Jin et al. (2014) studied the underlying travel habits and preferences of
Gen Y and advocated appealing features to be added to group package tours for
this cohort. In the tourism context, most of the existing literature on generation analysis
is not applicable to the emerging economies. To fill this research gap, this paper
attempts to conduct an empirical study on loyalty determinants for different Chinese
generations in a luxury hotel setting.
 IJCHM 2.3 Hypothesis development
27,7 2.3.1 Loyalty intentions. Understanding customer loyalty provides strategic information
for marketers to retain existing customers, enhance brand image and obtain a
competitive advantage (Zeithaml et al., 1996). As for the hotel industry, customer loyalty
is frequently conceptualized as the willingness to revisit a hotel and to spread positive
word-of-mouth (Ladhari, 2009).
1688 Efforts invested to build customer loyalty have been proved to pay valuable
dividends. In particular, companies make an earnest endeavor to enhance their service
quality and create customer value, through which customers are more inclined to find
themselves in positive emotional response (Chen and Hu, 2010; Gallarza and Gil Saura,
2006; Hutchinson et al., 2009; Oh, 1999). Service quality, perceived value, customer
satisfaction and loyalty have dominated the services literature for decades, whereas the
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discussion remains relatively limited for Chinese tourists (Sun et al., 2013), especially
from a generational perspective. Therefore, we propose the following framework to
examine the antecedents of luxury hotel loyalty for different Chinese generations.
2.3.2 Perceived hotel quality. Perceived quality has been conceptualized as a
customer’s evaluation of the overall excellence or superiority of the product or service
(Zeithaml, 1988). In the context of tourism and hospitality, perceived quality often refers
to the cognitive understanding or impression of service performance at the attribute
level, which is largely under the control of a service provider. Table I presents multiple
dimensions of perceived hotel quality identified by prior studies.
Quality is instrumental in the formation of value perceptions, given the latter as a
quality-price comparison (Zeithaml et al., 1996). In the hotel industry, especially the
luxury hotel sector, superior quality is found to be a direct antecedent of perceived value
(Hu et al., 2009). Superb hotel quality represents most of the positive benefit drivers that
will ultimately lead to higher customer value (Raza et al., 2012; Wu and Liang, 2009). In
particular, Chinese tourists tend to demonstrate high expectations on hotel quality
attributes, such as customized service, adequate facilities, convenience and food variety,
based on which high perceived value is derived (Tsai et al., 2011; Wang et al., 2008).
Therefore, we propose the first hypothesis for Chinese guests in luxury hotels:
H1. Perceived hotel quality will positively affect perceived value.
Superior quality also results in a positive attitude by fulfilling customers’ expectations
(Cronin et al., 2000; Oh, 1999). In the luxury hotel industry, service quality is identified as
the most important indicator of satisfaction (Li et al., 2013; Wilkins et al., 2009). Staff
service, facilities, F&B and value-added service are underscored as significant
antecedents to customer satisfaction for Chinese hotel guests (Heung, 2000). Therefore,
the following hypothesis is proposed:
H2. Perceived hotel quality will positively affect satisfaction.
Finally, superior service quality positively links with customer loyalty (Cronin et al.,
2000). This is especially critical to a hotel, where both core service and service encounter
performances can reduce guests’ likelihood of switching to another hotel (Han et al.,
2011). Chinese hotel patrons are also influenced by cultural values, for example elements
of service fairness such as rapport, courtesy and respect (Kwortnik and Han, 2011),
prestigious status (Gilbert and Tsao, 2000), convenience and facilities (Tsai et al., 2011).
Hence, the next hypothesis is proposed:

Article
a
Mattila (1999a)
Oh (1999)a
Chu and Choi (2000)
Heung (2000)
Kashyap and Bojanic (2000)a
Qu et al. (2000)
Dolnicar and Otter (2003)
Presbury et al. (2005)a
Akbaba (2006)
a
Wilkins et al. (2007)
Wang et al. (2008)
sector
Table I.
studies in the hotel
Service quality
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Dimensions/factors
Concrete attributes (location/price) and abstract
attributes (service/comfort/image)
Cleanliness, security, friendliness, check-in
speed, employees and room
Service quality, business facilities, value, room
and front desk, food and recreation and
security
Service quality and value, F&B, augmented
product, core product, reliability, supplement
service, value-added service and convenience
Quality of room, quality of public areas and
quality of staff services
Quality of staff performance, quality of room
facilities, variety and efficient services,
business-related services, value for money,
safety and security
Services, hotel, location, room, price/value,
F&B, image, security, marketing
Factors that impede service quality
Tangibles, service, caring, assurance and
convenience adopted from SERVQUAL
A second-order factor that incorporates stylish
comfort, extras, room quality, staff,
personalization and speedy services
Tangibles, reliability, empathy, assurances and
responsiveness
Context
61 interviews with luxury hotel guests in
Singapore, including Asian and Western
business travelers
545 customers of two large luxury hotels
in the USA
540 hotel guests in Hong Kong
276 mainland Chinese travelers who
stayed in Hong Kong hotels
Upscale business hotel guests in the
USA, including 265 business guests and
179 leisure guests
402 hotel guests in Hong Kong
A review on 21 hotel empirical studies
22 semi-structured interviews with
luxury hotel guests in Australia
234 hotel guests in Turkey
664 guests in Queensland’s luxury hotels
46 Chinese tourist who stayed in the UK
hotels
Findings
The attribute-consequence-alue chains for luxury hotels
are different between Asian and Western travelers
Perceived service quality influences satisfaction and
loyalty intentions through the mediating role of
perceived value
Room, front desk and security are the most important
attributes while value is found to underperform
Service quality and value and augmented product are
the most important factors that influence visitors’
satisfaction and revisit likelihood
Hotels should shift efforts from managing quality alone
to managing customer value. Disparities exist between
business and leisure travelers
Staff performance is the most influential factor to
satisfaction, followed by room facilities, value for
money, variety and efficient services, business-related
services, and safety and security
The study provides attribute rankings and suggests a
framework for future research
Budgets, staff attitude, lack of mentoring and high
expectations are the key impediments to service quality
Convenience is ranked the most important, followed by
assurance, tangibles, service and caring
An importance-performance-analysis is conducted to
identify attributes that hotels overperform or
underperform
Chinese tourists’ expectations on hotel quality are
higher than their perceptions. Differences exist between
business and leisure travelers
(continued)
1689
hotel loyalty
“LuXurY”
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27,7

1690

Table I.
IJCHM

Article Dimensions/factors Context Findings

Hu et al. (2009) Service quality, reliability, responsiveness,
assurance, empathy and tangibles
Ladhari (2009) Tangibles, reliability, responsiveness,
confidence and communications
Mohsin and Lockyer (2010)a Hotel ambience, F&B, staff presentation,
reservation services and value for money
Wilkins et al. (2009)a Stylish comfort, quality staff, personalization,
room quality, speedy service, added extras and
quality F&B
Han et al. (2011) Core service performance and service encounter
performance
Ramanathan and Customer service, cleanliness, room quality,
Ramanathan (2011) value for money, food quality and family
friendliness
Tsai et al. (2011) Overall attributes, services/facilities attributes,
room attributes and F&B attributes
Raza et al. (2012)a Service consistency, service convenience and
customer demand fulfillment
Tanford et al. (2012) Utility, green, amenity, brand, image and price
Li et al. (2013) Transportation, room, convenience, reception,
F&B and value for money
Dortyol et al. (2014) Staff, room, cultural, price, tangibles, hygiene,
entertainment, transportation and security
1500 hotel guests in Mauritius
200 local tourists who stayed in hotels in
Canada
271 five-star hotels guests in New Delhi,
India
664 luxury hotel guests in Queensland,
Australia
358 upper-midscale hotel guests in the
USA
online ratings for 664 hotels through
laterooms.com
76 Chinese tourists and 63 foreign
tourists who stayed in Hong Kong hotels
125 luxury hotel guests in Pakistan
535 online respondents in the USA who
stayed in a hotel at least twice in the past
12 months
content analysis of 42,668 online traveler
reviews on 774 star-rated hotels
307 tourists who stayed in hotels in
Turkey
Service quality significantly affects customer
satisfaction, corporate image and indirectly influences
behavioral intentions
Service quality exerts both direct and indirect effects on
behavioral intentions
An importance-performance-analysis demonstrates
problematic areas in front office, room service and
restaurants
Service quality directly affects customer satisfaction,
brand trust and brand attitude, and indirectly affects
loyalty
Customer satisfaction mediates the effect of service
performance on switching intentions
Value for money is the most important attribute, while
customer service, room quality and quality of food are
dissatisfiers
Chinese tourists are generally more demanding than
foreigners, despite their relative smaller hotel budgets
Perceived service quality and value positively affect
satisfaction and revisit intentions
Limited-service guests are influenced by tangible
benefits and pricing, while full-service guests value
non-price related attributes
Transportation, convenience and F&B are satisfactory,
but reception and room need improvements
Tangibles and food factors affect satisfaction, while
tangible, cultural and price influence behavioral
intentions

a
Note: Studies in the context of the luxury hotel sector
 H3. Perceived hotel quality will positively affect loyalty intentions. “LuXurY”
2.3.3 Perceived value. Perceived value is defined as “the consumer’s overall assessment hotel loyalty
of the utility of a product (or service) based on perceptions of what is received and what
is given” (Zeithaml, 1988, p. 14). Empirical studies in tourism and hospitality have
mostly adopted a utilitarian or functional perspective in the value models, for example
quality relative to the price paid or value for money; thus, companies offering high
quality at a comparable price are able to create value that leads to customer satisfaction 1691
(Gallarza and Gil Saura, 2006; Kim et al., 2011). In the luxury hotel industry, value is one
of the most important areas that can generate top performance and influence customer
satisfaction (Hutchinson et al., 2009). In particular, value for money is deemed salient for
Chinese guests, who are profoundly affected by the Confucian value of frugality (Heung,
2000; Li et al., 2011). Based on these findings, the next hypothesis is proposed:
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H4. Perceived value will positively affect satisfaction.

A positive impact on loyalty intentions is also evident in the hospitality literature (Kim
et al., 2011). Perceived value is essential in choosing accommodation, as it involves both
“give” and “get” components and is a more tangible cue during the service encounter
(Xie and Chen, 2014). This is particularly true in luxury hotels, where value has a
considerable influence on re-patronage and word-of-mouth intentions (Hutchinson et al.,
2009; Oh, 1999). Therefore, the following relationship is proposed:
H5. Perceived value will positively affect loyalty intentions.
2.3.4 Satisfaction. Satisfaction is defined as a customer’s fulfillment response, that is “a
summary cognitive and affective reaction to a service incident” (Rust and Oliver,
1994, p. 2). Customers’ favorable or unfavorable reactions will subsequently affect
their loyalty intentions(Cronin et al., 2000). The role of satisfaction in the hotel
industry is still debatable. Some scholars have argued that satisfaction does not
guarantee loyalty due to the low switching costs associated with the hotel industry
(Skogland and Siguaw, 2004). However, extant studies have empirically evidenced
that customer satisfaction is a dominant direct determinant of loyalty (Han et al.,
2011; Wilkins et al., 2009). Hence, the next hypothesis is proposed, consistent with
the mainstream findings of the literature:
H6. Satisfaction will positively affect loyalty intentions.
2.3.5 Moderating role of generation. As discussed, one’s values, beliefs and behaviors
are profoundly shaped by the formative experiences of his/her generation (Gardiner
et al., 2013). Different generations are perceived to embrace within-group homogeneity
and distinct between-group behaviors. Prior studies have indicated significant
differences in attitudes and purchase patterns among Western generations in that Gen
X-ers are more economic value oriented, while Gen Y-ers focus more on affective value
(Kumar and Lim, 2008; Parment, 2013). China’s Gen Y-ers are demonstrating different
consumption preferences from their preceding generations, characterized by their brand
consciousness and willingness to pay premium for luxury brands (O’Cass and Choy,
2008). They are more apt to spend their savings on luxury products, not merely for the
brand name but also for the high quality (Sun, 2011). Therefore, the last hypothesis is
proposed:
 IJCHM H7. The relationships among perceived hotel quality, perceived value, satisfaction
27,7 and loyalty intentions (H1 to H6) are moderated by the generation (Gen X and
Gen Y).

3. Methodology
3.1 Sample and data collection
1692 A convenience sampling method was adopted to collect the data at the border gates and
major tourist attractions in Macau. A qualified respondent had to be a Chinese tourist
born between 1960 and 1995 and a five-star hotel guest during his/her trip to Macau.
Only qualified respondents were invited to participate in the survey. Undergraduate
students majoring in hotel management were engaged and trained to conduct the
surveys over a two-week period. Finally, 285 usable questionnaires were collected,
coded and analyzed.
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3.2 Instrument development

Based on previous studies, a questionnaire was designed to measure perceived hotel
quality, perceived value, customer satisfaction and loyalty intentions. It was first
designed in English and then translated to Chinese by two bilingual academic
researchers, using a back-to-back translation method to reduce possible translation
errors. Prior to data collection, a pilot test was conducted with 60 respondents. The
questionnaire was then finalized and four sections were included.
The first section assessed tourists’ perceived quality germane to hotel attributes. A
30-item scale was adopted from previous studies (Chu and Choi, 2000; Dolnicar and
Otter, 2003; Wilkins et al., 2007). The second section adopted a two-item scale from
Al-Sabbahy et al. (2004) to measure perceived value. The third section aimed to evaluate
customers’ satisfaction with a three-item scale adopted from Han et al. (2011). The fourth
section solicited hotel loyalty intentions based on Kim et al. (2013). All scale items were
assessed based on a five-point Likert scale, ranging from strongly disagree (1) to
strongly agree (5). The last section sought to obtain respondents’ demographic profiles
and travel characteristics.

3.3 Data analysis

Data analyses were conducted using SPSS 20.0 and AMOS 18.0. To validate the scale of
interest, the data were randomly split into two sub-samples. An exploratory factor
analysis (EFA) was conducted with the first sub-sample and a confirmatory factor
analysis (CFA) with the second sub-sample. Finally, structural equation modeling
(SEM) was used to test the hypothesized relationships among the research variables.
The effects of respondents’ demographic and travel characteristics were also controlled,
including gender, education and past hotel experience. SEM was performed using
bootstrapping method with 1,000 re-samples to account for the potential distortion
caused by the limited data (Adèr and Mellenbergh, 2008).

4. Results
4.1 Sample profile
Of the 285 respondents, 124 (43.5 per cent) were Gen X travelers and 161 (56.5 per cent)
were Gen Y travelers. Table II summarizes the demographic and travelling
characteristics of the respondents. Chi-square tests were performed and revealed that
the two groups were statistically different in gender, education, expenditure, luxury
 Gen X (N ⫽ 124) Gen Y (N ⫽ 161)
“LuXurY”
Variables Frequency (%) Frequency (%) Significance hotel loyalty
Gender ⬍ 0.001***
Male 78 62.9 62 38.5
Female 46 37.1 99 61.5
Education 1693
Primary school 11 8.9 2 1.2 ⬍ 0.001***
Secondary school 51 41.1 41 25.5
Vocational school 14 11.3 2 1.2
University 36 29.0 100 62.2
Postgraduate 12 9.7 16 9.9
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Shopping expenditure 0.02*

Less than 4,500 RMB 12 9.7 34 21.1
4,501-6,000 RMB 28 22.6 36 22.4
6,001-7,500 RMB 20 16.1 36 22.4
7,501-9,000 RMB 21 16.9 18 11.1
More than 9,000 43 34.7 37 23.0
RMB
Experience in a five star hotel in Macau 0.04*
First time 38 30.6 54 33.5
Second time 28 22.6 53 32.9
Third time 23 18.5 28 17.4
Fourth time 11 8.9 13 8.1
More than four times 24 19.4 13 8.1
Travel purpose 0.03*
Leisure 106 85.5 150 93.2
Business 18 14.5 11 6.8 Table II.
Demographic and
Note: * p ⬍ 0.05; *** p ⬍ 0.001 trip characteristics

hotel experience and travel purpose. While males made up the great majority of the Gen
X respondents (62.9 per cent), more than a half of their Gen Y counterparts were female
(61.5 per cent). In terms of education, the Gen Y group had more respondents with a
Bachelor’s degree or higher (72.1 per cent) than Gen X (38.7 per cent). As for shopping
expenditure, while over half (51.6 per cent) of the Gen X respondents spent more than
7,500 RMB, only 34.1 per cent of the Gen Y-ers spent that much. Furthermore, the Gen
X-ers generally had more past experiences staying in a five-star hotel, with a larger
proportion being business travelers.

4.2 Validity and reliability of the measurement items

An EFA was first conducted to identify the dimensionalities of hotel quality, using
principal component analysis with orthogonal varimax rotation. Only those factors with
eigenvalues exceeding 1.0 were extracted. Items yielding factor loadings lower than 0.50
or being loaded on more than one factor were removed. The results of the EFA produced
five factors with the remaining 18 items: Room and Service, F&B, Facilities, Convenience
and Security and explained 68.8 per cent of the variance. The value of the
 IJCHM Kaiser-Meyer-Olkin (KMO) measure was 0.84, demonstrating a satisfactory measure of
27,7 sampling accuracy. Besides this, the Bartlett’s chi-square was significant, indicating an
acceptably valid result.
CFA was performed to test the reliability and validity of all the constructs, as
represented in Table III. The test showed a good fit (␹2/df ⫽ 1.29, CFI ⫽ 0.96, NNFI ⫽

1694
Standardized
Scale items loadings ␣ CR AVE

Perceived quality of hotel attributes

Room and Service 0.88 0.88 0.54
The staff provide good housekeeping services 0.61
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The staff are respectful and polite 0.79

The staff are professional and quick to respond to
request 0.74
The hotel atmosphere/decoration is stylish 0.66
The beds in the room are comfortable 0.79
The hotel room is clean and relaxing 0.82
F&B 0.72 0.75 0.51
The hotel has a variety of high-quality restaurants 0.68
The dining hours of the hotel restaurants meet my
needs 0.83
The hotel has a good range of bars/lounges 0.62
Facilities 0.84 0.85 0.54
The hotel provides good baby attendance facilities 0.65
The hotel provides good parking facilities 0.65
The hotel provides good fitness facilities 0.84
The hotel provides good business facilities 0.68
The hotel provides good loyalty program 0.82
Security 0.79 0.79 0.66
It is safe in the hotel 0.74
The hotel guarantees fire security 0.88
Convenience 0.72 0.72 0.57
The hotel is convenient to shopping centers 0.80
The hotel is convenient to attractions 0.70
CFI ⫽ 0.95, NNFI ⫽ 0.93, RMSEA ⫽ 0.06, SRMR ⫽ 0.05
Perceived Value 0.70 0.79 0.67
I received good value for the money I spent in the hotel 0.65
This hotel met my specific needs at a reasonable price 0.96
Satisfaction 0.87 0.87 0.70
Overall, I am happy with my decision to stay at this
hotel 0.97
I believe I did the right thing when I stayed at this
hotel 0.72
Overall, I am satisfied to stay at this hotel 0.79
Loyalty intentions 0.88 0.92 0.85
I will revisit this hotel again 0.90
Table III. I will recommend this hotel to others 0.95
Scale items and
validation Notes: ␣ ⫽ Cronbach’s alpha; CR ⫽ composite reliability; AVE ⫽ average variance extracted
 0.95, RMSEA ⫽ 0.04, SRMR ⫽ 0.05). The measurement model was reliable as composite “LuXurY”
reliability (CR) coefficients ranged from 0.72 to 0.92, and Cronbach’s alpha values hotel loyalty
ranged from 0.70 to 0.88, exceeding the threshold of 0.70. The model also achieved
construct validity as all the standardized coefficients were significant at the 0.01 level
and convergent validity with all the average variance extracted (AVE) exceeding the
0.50 cutoff value.
Finally, discriminant validity was assured by comparing the square root of the AVE 1695
with the correlation between constructs (Table IV). The square root of the AVE of each
construct was greater than the correlations between it and other constructs, ensuring the
discriminant validity.

4.3 Results of hypotheses testing

4.3.1 Multicollinearity and measurement invariance test. Prior to testing the hypotheses,
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we performed diagnostics for multicollinearity, which is not an issue in the study, with
all the variance inflation factors below 1.52.
A measurement invariance test was also conducted across the two generational
groups (Chi, 2012). The results suggested that the measurement model was Tau
equivalent across Gen X and Y (Table V).
4.3.2 Structural results for the entire group. Wilkins et al. (2007) suggested a
second-order construct to measure hotel quality, which has several advantages over a
first-order factor, for example to explain the covariance in a more parsimonious way and
to provide a simplified interpretation of complex measurement structures (Chen et al.,
2005). Therefore, we tested the hypothesized relationships using the second-order of the
perceived quality scales, as Figure 1 illustrates. The goodness-of-fit statistics of the
proposed model show that the model adequately fits the data (␹2/df ⫽ 1.55, CFI ⫽ 0.95,
NNFI ⫽ 0.94, RMSEA ⫽ 0.04, SRMR ⫽ 0.06).
The hypothesized effects of perceived hotel quality on perceived value (␤ ⫽ 0.37, p ⬍
0.001), satisfaction (␤ ⫽ 0.62, p ⬍ 0.001) and loyalty intentions (␤ ⫽ 0.30, p ⬍ 0.01) are
significant, supporting H1, H2 and H3. Perceived value only exercises a significant
effect on loyalty (␤ ⫽ 0.38, p ⬍ 0.001), while its impact on satisfaction is not
significant. Therefore, the results support H5, but not H4. Finally, there is no significant
relationship between satisfaction and loyalty, and H6 is rejected.
4.3.3 Generational differences between Gen X and Y. Within the second-order factor
“perceived hotel quality” and its first order factors, the factor loadings give an indication

1 2 3 4 5 6 7 8

Room and service 0.74

F&B 0.61 0.71
Facilities 0.41 0.56 0.73
Security 0.61 0.33 0.22 0.81
Convenience 0.30 0.40 0.35 0.33 0.75
Value 0.15 0.13 0.27 0.07 0.03 0.82
Satisfaction 0.37 0.38 0.30 0.35 0.40 0.01 0.84
Loyalty intentions 0.40 0.38 0.32 0.40 0.10 0.30 0.22 0.92 Table IV.
Inter-factor
Note: Diagonal elements are the squared root of AVE for each construct correlations
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27,7

1696
IJCHM

Table V.
Measurement
invariance test
Fit indices Configural invariance (M1) Tau equivalence (M2) Parallel model (M3)
2
␹ 636.28 672.04 894.18
Degree of freedom (df) 490 515 542
P ⬍0.001 ⬍0.001 ⬍0.001
CFI 0.96 0.95 0.90
NNFI 0.95 0.95 0.89
RMSEA 0.03 0.03 0.05
SRMR 0.06 0.06 0.07
␹2 difference tests Configural invariance (M1) versus Parallel model (M3) versus Tau Conclusion
Tau equivalent (M2) equivalent (M2)
␹2 critical ⌬df ⫽ 25 ⌬df ⫽ 27 The measurement was Tau equivalent across Gen
␹20.95, 25 ⫽ 37.65 ␹20.95, 27 ⫽ 40.11 X and Gen Y visitors
⌬ ␹2 ⫽ 35.76 ⬍ ␹20.95, 25 ⌬ ␹2 ⫽ 222.14 ⬎ ␹20.95, 27
Thus, M1 did not show a Thus, M2 performed
significantly better model fit than significantly better than M3
M2

Notes: M1 assumes the same pattern of fixed and free factor loadings across groups; M2 assumes that factor loadings were invariant across groups;
M3 assumes that both factor loadings and residual variance were invariant across groups
 “LuXurY”
Room and
service
hotel loyalty

Perceived
F&B 0.73***
Value

0.76*** 0.37***
1697
0.38**
Perceived −0.13
0.68*** 0.30** Loyalty
Facilities hotel
intentions
quality
0.58***
−0.06
0.62***
0.63***
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Convenience Satisfaction

Security

(a)

Room and
service

Perceived
F&B 0.77***(0.77***)
Value
0.34*
0.77***(0.68*** ) (0.41***) 0.20*
–0.06 (0.55***)
Perceived (–0.18)
0.70*** 0.12 Loyalty
Facilities (0.68***) hotel
(0.33**) intentions
quality
0.76***
(0.51***) 0.61*** 0.12
Convenience (0.61***) (−0.12)
Satisfaction
0.53***
(0.63***)

Gen X VS (Gen Y)
Security

(b)

Notes: (a) The entire group; (b) gen X and Gen Y; statistically significant; Figure 1.
statistically not significant; statistically significant for Gen Y only; Results of the
*p < 0.05; **p < 0.01; ***p < 0.001 structural model
 IJCHM of the relative importance (Wilkins et al., 2007). As shown in Figure 1, Gen X-ers place
27,7 more weight on room and service, F&B and convenience (␤ ⫽ 0.77, ␤ ⫽ 0.77 and ␤ ⫽
0.76), followed by facilities (␤ ⫽ 0.70) and less weight on security (␤ ⫽ 0.53). However,
while Gen Y-ers also emphasize room and service (␤ ⫽ 0.77) and facilities (␤ ⫽ 0.68), this
generation places less weight on F&B (␤ ⫽ 0.68) and convenience (␤ ⫽ 0.51), yet security
is more reflective of hotel quality (␤ ⫽ 0.63).
1698 For the hypothesized relationships in the proposed model, H1, H2 and H5 are
supported, while H4 and H6 are rejected for both groups; H3 is supported only for Gen
Y. The results indicate that perceived hotel quality only has a direct impact on loyalty
intentions for the younger generation.
The mediation role of perceived value was tested via a bias-corrected (BC)
bootstrapping approach (with 2000 re-samples) as suggested by Cheung and Lau (2008).
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Table VI summarizes the bootstrapping results. For Gen X, the indirect effect of
perceived quality on loyalty through perceived value was significant: ␤ ⫽ 0.07, with a 95
per cent BC bootstrapping confidence interval (CI) of 0.01 to 0.24. In addition, the direct
effect became insignificant after controlling for the mediator: ␤ ⫽ 0.14, with a 95 per cent
CI of ⫺0.14 to 0.41. For Gen Y, both indirect and direct effects are significant. Moreover,
the direct causality (␤ ⫽ 0.31) is reduced in magnitude compared to the same path in the
model with no mediation effect (␤ ⫽ 0.56). The results indicate that perceived value fully
mediates the quality–loyalty relationship for Gen X, while only partial mediation exists
for Gen Y.
Next, the moderating role of generation is examined. The chi-square difference test is
extensively adopted for path coefficient comparison in structural models. However, it
has been noted that this method is sensitive to sample size. Therefore, a widely accepted
procedure suggested in Keil et al. (2000) is adopted to assess how the hypothesized
relationships vary between the two generations (Table VII). The results indicate a
significant moderating effect of generation on the path of quality ¡ value (t (283) ⫽ 2.50;
p ⬍ 0.05), quality ¡ loyalty (t (283) ⫽ 2.60; p ⬍ 0.01) and value ¡ loyalty (t (283) ⫽ 7.63;
p ⬍ 0.001). Therefore, H7 is partially supported. In particular, the quality–value path is
significant for both groups, but larger for Gen Y (␤ ⫽ 0.41, p ⬍ 0.001) than Gen X (␤ ⫽
0.34, p ⬍ 0.05). Similar results also hold for the quality–loyalty path (Gen Y: ␤ ⫽ 0.33,
p ⬍ 0.01; Gen X: ␤ ⫽ 0.12, n.s.) and the value–loyalty path (Gen Y: ␤ ⫽ 0.55, p ⬍ 0.001;
Gen X: ␤ ⫽ 0.20, p ⬍ 0.05).

Gen X Gen Y
Bootstrapping Bootstrapping
percentile percentile
Estimate 95 % CI Estimate 95 % CI
Effects Coefficient SE Significance Lower Upper Coefficient SE Significance Lower Upper

Indirect 0.07 0.05 0.04* 0.01 0.24 0.21 0.09 0.01** 0.06 0.47
Direct 0.14 0.15 0.32 ⫺0.14 0.41 0.31 0.12 0.03* 0.03 0.54
Table VI.
Mediation effect of Notes: Coefficients are standardized; SE ⫽ standard error; CI ⫽ confidence interval; * p ⬍
perceived value 0.05; ** p ⬍ 0.01; for Gen Y, direct effect with no mediation: coefficient estimate ⫽ 0.56
 Standardized Unstandardized
“LuXurY”
coefficient coefficient t-value hotel loyalty
Hypothesized paths Gen X Gen Y Gen X Gen Y (df ⫽ 283)

H1: PQ -⬎ PV 0.34* 0.41*** 0.52* 0.66*** 2.50*

H2: PQ -⬎ Satisfaction 0.61*** 0.61*** 0.99*** 0.97*** 0.08
H3: PQ -⬎ Loyalty intentions 0.12 0.33** 0.60 1.65** 2.60**
H5: PV -⬎ Loyalty intentions 0.20* 0.55*** 0.66* 1.69*** 7.63***
1699
Notes: PQ ⫽ Perceived hotel quality; PV ⫽ Perceived value; * p ⬍ 0.05; ** p ⬍ 0.01; *** p ⬍ 0.001;
path coefficients in H4 and H6 are not significant for both generations and are not compared; statistics
implemented in Keil et al. (2000) to compare corresponding paths:

冪共 兲 共 兲
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N1 N2
Spooled ⫽ ⫻ SE12 ⫹ ⫻ SE22,
N1 ⫹ N2 ⫺ 2 N1 ⫹ N2 ⫺ 2

PC1 ⫺ PC2
tpooled ⫽
Spooled ⫻ 兹1 / N1 ⫹ 1 / N2 Table VII.
Comparison of the
where Spooled refers to the pooled estimator for the variance, tpooled refers to the t-statistics with (N1 ⫹ N2 path coefficients
⫺ 2) degrees of freedom, Ni, SEi and PCi (i ⫽ 1 and 2) are the sample size, standard error of paths and between Gen X and
path coefficients of generation group i, respectively Gen Y

5. Conclusions
Tourists from rising economies hold a lot of promise for the growth of the luxury hotel
industry; yet, limited research has been conducted on this important market. It is
especially rare to investigate how life experiences cause disparities in consumer
behaviors from a generational perspective. This study is the first attempt to investigate
the differences between two Chinese cohorts, Gen X and Gen Y, in building loyalty to
luxury hotels. The results provide much information for industry marketers and
advance generational research on Chinese tourists.

5.1 Theoretical implications

The study makes noteworthy contributions to the intra-cultural difference of Chinese
tourists. The findings indicate that Gen Y-ers in China comprise Eastern and Western
cultural attributes and demonstrate notably disparate values and behavioral intentions
from the previous generation. Overall, this study sheds light on future research to
explore the characteristics of young tourists.
5.1.1 Attribute-based hotel quality. The results elucidate that different hotel attributes
count for different generations. It is commonly shared by both generations that room
and service constitute the core of hotel quality and facilities represent an important
aspect in quality evaluation. However, it is noted that convenience and F&B are more
salient for Gen X, whereas special attention should be paid to security for Gen Y-ers. The
results are partially supported by previous studies. Benefiting from the relaxed travel
regulations, Gen Y-ers in China are exposed to more opportunities for long-haul
adventures and possess a strong interest in exploration. Therefore, they exhibit less
reliance on conveniently located hotels (Barnes and Peters, 1982). On the other hand, Gen
 IJCHM X-ers place more weight on the convenience factor and tend to enjoy fine dining in the
27,7 luxury hotel they stay in, rather than seeking gourmet food elsewhere in the destination.
Hence, the F&B quality in the hotel is of great importance to this generation. Regarding
the security issue, Chinese tourists are normally risk averse and may hesitate to travel to
destinations perceived to be dangerous (Sparks and Pan, 2009). This is particularly true
for Gen Y-ers in China, who are overprotected by their families.
1700 5.1.2 Satisfaction. The results indicate that satisfaction only exerts a weak influence
on customers’ behavioral intentions for both Chinese generations, consistent with the
findings of Lee et al. (2011). It is noted that “satisfaction is not loyalty” in the
service-profit chain of the luxury hotel industry (Bowen and Shoemaker, 2003, p. 32). To
satisfy the basic needs of demanding guests is a must for five-star hotels; however,
satisfied customers do not necessarily guarantee loyalty in the lodging industry, where
competition is intensive, while switching cost is relatively low (Skogland and Siguaw,
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2004). In particular, the new money elites in China are just beginning to experience
luxuries. They are still apt to practice frugality and behave prudently when budgeting
non-shopping spending, such as accommodation and dining. In addition, Chinese
customers’ re-patronage decisions are largely affected by negative emotions, for
example complaints, while positive affections or satisfaction may not necessarily create
high loyalty (Lee et al., 2011).
5.1.3 Perceived value and quality in building loyalty. Most importantly, this study
makes a great contribution by elaborating the role of perceived value for different
Chinese generations. Perceived value, unlike satisfaction, significantly influences
loyalty intentions, reflecting the Chinese Confucian value of frugality (Li et al., 2011).
This result echoes the priority of value over satisfaction in the luxury lodging industry
(Mattila, 1999b) and the discussions of price sensitivity of Chinese customers (Zhang
and Murphy, 2009). However, Gen X-ers are value-centered, while Gen Y-ers’ loyalty
intentions are associated with both value and the level of quality attained. As concluded
by Kwan et al. (2008), being the first generation born into consumerism, Chinese Gen
Y-ers are both value- and quality-conscious. Their pronounced aspiration for a high
standard of living drives this young generation to shop carefully and rationally for
superior quality products. Apart from value for money, they also demand excellence in
quality attainment from aesthetics to comfort. In contrast, for Gen X-ers who are more
economical and value oriented, perceived value firmly plays a central mediating role in
the quality-loyalty relationship.
The findings also advance literature on Chinese Gen Y’s consumer behaviors. Both
the value-intention and quality-intention paths are significantly stronger for Gen Y.
Tagged with self-indulgence, materialism and brand fanaticism, Gen Y-ers in China
have long been judged as “spoiled little emperors” and are criticized for their
extravagance and compulsive buying tendencies (Durvasula and Lysonski, 2010), while
their elders are often complimented on their thriftiness. However, the findings in this
research could in a way alter the stereotype about young generations in China. With the
ability to compare prices across multiple channels, Gen Y-ers are price-conscious
consumers (Jang et al., 2011). Compared with Gen X-ers, perceived value plays a more
significant role in determining the younger generation’s loyalty intentions, which
implies favor for value and frugality inherited from their parents. However, their
“frugality” differs from that of their parents in a manner that connects to the Western
ideals of hedonism – quality is the key. While being generous and loyal to high-quality
 products and services with good value, Gen Y customers may regard it a waste of money “LuXurY”
to consume inferior goods with a lower price. This echoes the point made by Lynton and hotel loyalty
Thøgersen (2010): as a hybrid generation, Chinese Gen Y-ers conciliate Eastern and
Western cultures by exhibiting both the traditional Confucian value and the modern
concept of individualism and hedonism.

5.2 Managerial implications 1701

Practically, this study provides hoteliers with many implications. First, the findings
forge a better understanding of luxury hotel quality for hotel operators and help them
cater to different generations. Top quality rooms and high staff service standards
represent the essentials of upscale hotel quality for Chinese guests. It is therefore a
primary goal for hoteliers to maintain high quality in these basic elements, especially in
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staff courtesy, attentiveness, fairness and professionalism (Kwortnik and Han, 2011;
Tsai et al., 2011). More attention could be given to F&B and convenience to lure Gen X
tourists. For instance, hotels can offer guidebooks, signs or maps and provide frequent
shuttle bus services for the sake of convenience. These practices also convey care and
concern for customers (Tsai et al., 2011). Hotel restaurants may modify their food menus
for middle-aged guests who tend to adhere to their ingrained dining habits and have a
preference for Chinese food with “appetizing assurance” (Chang et al., 2010). F&B
managers can offer more choices of traditional Chinese food, provide hot food and water
and periodically revise the menu to add excitement. On the other hand, upscale hotels
targeting the younger generation should be equipped with high-quality multi-faceted
peripherals. For example, hotels can provide updates to the facilities with the latest
in-room technology, as Gen Y-ers are highly techno-literate and media savvy. Fine
dining Western restaurants may allure Gen Y customers, who favor status
consumption, imported brands and Western cultures (Stanat, 2006). Their needs for
security also call for an exceptional level of service, such as private butlers, personal
information protection programs and high-tech security systems.
Second, our findings imply that customer satisfaction is a must, not a plus, for
Chinese tourists. Hotel operators should strive to maintain certain satisfaction levels to
reduce customer loss. However, it is not in the best interests of the company to offer
over-the-top opulence to flatter Chinese hotel guests, but rather to create value by
implementing competitive pricing strategies that are complementary to the superb
services. For example, luxury hotels can provide discounts for extended stays or
bundled packages for other tourist activities, such as entertainment, fine dining and
local tours.
In particular, superior quality coupled with favorable value is high on the agenda for
Gen Y-ers. As such, hotels should escalate their quality standards rather than simply
offer room upgrades or complimentary champagne. Personalized services, exclusive
experiences and novelties are some of the avenues to win the loyalty of this generation.
Customers’ consumption and preference records may provide cues for managers to cater
to their guests, for example to stock the minibar with customers’ favorite items and
arrange room setup preferences, such as the temperature, pillow type and atmospheric
music. To better identify the niche of this market segment, luxury hotels could also
capitalize on customer profiles to offer tailored communication and encounters and
share the information within the hotel group through a customer relationship
management system.
 IJCHM 5.3 Limitations and future research
27,7 First, the convenience sampling method hinders generalization of the results. Chinese
outbound tourists who are interested in and able to afford luxury hotel stays still remain
a small group within the nation. Future research may surmount this barrier by
providing more baseline data generated from advanced research design. Second, the
research was conducted in Macau, where local values and culture may not substantially
1702 differ from those of the Mainland Chinese. Future study may compare the model across
different cultures. Third, the present study has only investigated the cognitive value for
a managerial perspective, and future research may also elaborate other dimensions of
perceived value. Finally, this study is an initial attempt to make a generational
comparison of Chinese luxury hotel guests, and an in-depth research could further
explore more aspects among other generations.
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Corresponding author
Fiona X. Yang can be contacted at: fionayang@ift.edu.mo

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