Examining the Step-Up Brand Extensions of Budget Hotels: The Reciprocal Spillover Effects

Abstract

This study investigates and validates the reciprocal spillover effects model in the upward extensions of budget hotel brands to the midscale market. In particular, the relationships among the components of extended brand performance (i.e., quality, innovativeness, and involvement) and their effects on customer attitude toward parent budget brands are modeled and tested through an empirical study of three leading budget hotel brands in China and their mid-end extensions. Data were collected through an online survey of 790 customers and then analyzed using structural equation modeling. Results confirmed that the three extension performance components can directly or indirectly affect attitude toward parent brands. The findings of this study will assure budget hotel groups that step-up brand extension can be beneficial to their original brands.

Branding the hotel industry: The effect of step-up versus step-down brand extensions

“…Nevertheless, the insignificant result might imply that the step-up extension neither outperforms nor underperforms, suggesting that value perceptions are not affected. Although these general findings offer a viable explanation for some of the mixed results in the literature concerning performance outcomes of brand extensions (e.g., Childs et al, 2018;Ye et al, 2019), future research should investigate the discrepancy between step-up and step-down extensions and their role in value perception and revisit intentions as well as the differing mechanisms that might drive it.…”

“…While some studies report positive effects (e.g., , others find evidence of parent brand dilution following the introduction of brand extensions (e.g., Childs et al, 2018). Ye et al (2019), in addition to highlighting inconsistencies in current empirical brand extension research, further observe that the majority of extant studies take a manufacturing industry perspective, with limited research conducted in the hospitality services sector. Therefore, while there is an apparent need to examine the link between hotel brand extensions and their outcomes, few studies have, in fact, explored this, and even fewer have investigated the boundary conditions that may serve to explain some of the empirical inconsistencies (cf.…”

“…Notwithstanding the potential upsides of following a successful brand extension strategy, the extant academic literature reveal inconsistencies with regard to the direction of the parent brand-extended brand relationship and its outcomes (Ye et al, 2019). While some studies report positive effects (e.g., , others find evidence of parent brand dilution following the introduction of brand extensions (e.g., Childs et al, 2018).…”

“…Pontes et al, 2017). Moreover, given the rise of online hospitality brokers like Airbnb and the new breed of consumers whose needs and demands are entirely different to those of previous generations, catering for different market segments and leveraging existing brand value are of utmost importance for lodging firms (Ye et al, 2019).…”

Prioritizing hotel lobby design factors: perspectives of hotel operators in China

“…Further, budget hotel chains with price advantages and standardized service are transforming themselves to enter the higher-end market (Huang, Liu, and Hsu 2014;Jiao 2014;Andreu, Claver, and Quer 2017;Ye, Wu, and Paek 2020). In this situation, hotel operators have started considering various branding and marketing strategies.…”