Will you choose a low-rating hotel that offers promotions? – Insights from the prospect theory

Built upon the compensatory decision-making model and anchor effect from the prospect theory, the current research examines the interactive effects of sales promotion and rating disadvantage on the intention to choose a low-rating hotel over a high-rating hotel. A 4 (sales promotions: control vs. monetary vs. non-monetary vs. combined) by 2 (rating disadvantage: small vs. big) scenario experiment was conducted to investigate participants' hotel choice intentions. Two-way ANCOVA results suggest that respondents' intention to choose the lower-rating hotel increases when it has a small rating disadvantage and provides a combined promotion (i.e. discount + free gift).