Commoditization in the U.S. Lodging Industry

Abstract

A comparison of four elements that constitute commoditization as viewed by U.S. hotel industry executives and by customers from a national sample found that the two groups ascribe different weights to the four factors in the commoditization model. In a test of these four factors, the seventy industry executives in the survey thought that product homogeneity contributed the most to commoditization, followed by industry stability, switching costs, and price sensitivity. However, from the customers’ point of view, price sensitivity was far and away the key element of commoditization, with product homogeneity having a much smaller effect. Stability and switching costs were not considered as part of the consumers’ perception of commoditization. Although the study is based on the views of hotel industry executives and customers, it makes no attempt to gauge the level of industry commoditization, because its goal is to establish the nature of commoditization as framed in the hotel industry.