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A Customer-Based Brand Equity Model for Upscale Hotels

Cathy H. C. Hsu, Haemoon Oh and A. George Assaf
Journal of Travel Research 2012 51: 81 originally published online 5 January 2011
DOI: 10.1177/0047287510394195

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 Journal of  Travel Research

A Customer-Based Brand Equity 51(1) 81­–93

© 2012 SAGE Publications
Reprints and permission:
Model for Upscale Hotels sagepub.com/journalsPermissions.nav
DOI: 10.1177/0047287510394195
http://jtr.sagepub.com

Cathy H. C. Hsu1, Haemoon Oh2, and A. George Assaf2

Abstract
The authors propose a customer-based brand equity model for use in global branding efforts and research, based on a series
of qualitative and quantitative studies. They find new dimensions of brand equity that need to be considered by lodging
researchers and operators. Components of brand equity generated from literature review and focus groups are ordered in
theoretical relationships and the model structure is assessed against rival structures. The model is tested with data collected
from travelers in 12 major cities in China and validated across several subgroups of travelers. Results support the validity
and reliability of the proposed model.

Keywords
brand equity, brand loyalty, brand choice, brand image, China tourism

Efforts to measure the value of a brand are becoming increas-
ingly important with the need of firms to position and compete
globally (Keller 2003a, 2003b). Such efforts are particularly
critical in the lodging industry, where branding has been
popularly used as a strategy to develop new products and
introduce existing and extended brands to new markets, both
domestic and global (Jiang, Dev, and Rao 2002; Kotler,
Bowen, and Makens 2006). A major paradigm shift in recent
decades of the economy also stresses the significance of
business models embracing intangibles such as brand and
knowledge as the key drivers of value creation (Forgacs 2009).
Given the sheer amount of resources required in building a
strong brand (Aaker 1991) and persistent rollouts of new
hotel brands (Boyd 2007), measuring what a brand can add
to the business portfolio seems to be a critical management
practice. Therefore, branding and its value measurement are
the central parameters in many strategy formulae of lodging
firms, especially in the era of global expansion and competi-
tion (Cai and Hobson 2004; Kayaman and Arasli 2007).
The overall value created by a brand has been conceptual-
ized as brand equity (e.g., Bailey and Ball 2006). In his semi-
nary book on how to manage brand equity (BE), for example,
Aaker (1991) defined BE most comprehensively as “a set of
brand assets and liabilities linked to a brand, its name and
symbol, that add to or subtract from the value provided by a
product or service to a firm and/or to that firm’s customers”
(p. 15). Keller (2003a, p. 42) also offered a similar view on
the basic principles of BE in that BE (1) was the added value
resulting in different marketing outcomes, (2) provided a
common denominator for interpreting marketing strategies
and assessing the value of a brand, and (3) reflected the
value of a brand that could be created in many different
ways. Thus, estimation of the incremental value generated
by a brand and its marketing implications rely consequently
on how to measure BE.
Researchers have taken largely one of three complemen-
tary approaches to measure BE (e.g., Kim and Kim 2005;
Sriram, Balachander, and Kalwani 2007). One approach was
a marketing perspective to measure both the components and
outcomes of BE based on customer opinions or purchase
behavior. Aaker (1991, 1996) and Keller (1993, 1996, 2003a,
2003b) presented a series of conceptual works and case stud-
ies to argue that customer-based BE directly account for the
effectiveness of the firm’s brand-related marketing activities.
Punj and Hillyer (2004) and Pappu, Quester, and Cooksey
(2005) exemplify empirical studies of customer-based BE in
line with Aaker and Keller. A second approach has been a
financial perspective in which BE is estimated based on the
incremental cash flows and asset values accrued to a brand
(Motameni and Shahronkhi 1998). Simon and Sullivan (1993),
for example, conducted interfirm analyses to estimate BE
based on incremental cash flows, while Ailawadi, Lehmann,
and Neslin (2003) validated revenue premium as a measure
of BE. Yet other researchers have attempted to derive BE in
1
The Hong Kong Polytechnic University, Hung Hom,
Kowloon, Hong Kong
2
University of Massachusetts, Amherst
Corresponding Author:
Cathy H. C. Hsu, School of Hotel and Tourism Management, The Hong
Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
Email: hmhsu@polyu.edu.hk

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82 Journal of T  ravel Research 51(1)
a holistic perspective combining both the marketing and
financial perspectives. Srinivasan, Park, and Chang (2005)
integrated both the firm’s and customer’s perspectives to
compute brand choice probability, while Motameni and
Shahronkhi (1998) incorporated the brand’s net earnings and
the customer’s value perceptions into their proposed BE
model.
Research on BE in the tourism and hospitality (T&H) dis-
cipline began to emerge sporadically in the last two decades
and the demand for additional research is growing (Boyd
2007; Forgacs 2009). Most T&H BE studies have adopted
the marketing perspective measuring the value of a brand or
destination based on guests’ or travelers’ attitudes. As pro-
posed by Prasad and Dev (2000), hotel BE could be indexed
in a combination of brand awareness and brand performance
that reflected customer satisfaction, return intention, price–
value relationship, and preference. A customer-based measure-
ment of hotel and restaurant BE continued to be a mainstay
of Kim and colleagues (e.g., Kim, Jin-Sun, and Kim 2008;
Kim and Kim 2005). Konecnik and Gartner (2007) applied a
similar approach to measure the BE of a Slovenian tourist
destination and showed that components of BE could be
causally ordered. These studies were timely in that the
demand for BE research was on the rise. In the past 15 years,
for instance, the supply of franchised hotels far outpaced that
of unbranded, independent hotels, doubling the growth rate
in the past three years in particular (Church 2009). Forgacs
(2009) estimated that in the United States branded franchise
hotels account for more than 70% of all room supply.
Recently accelerated merger and acquisition activities wide-
spread in the lodging industry are likely to promote the
importance of measuring BE for financial trades as well
(Pricewaterhousecoopers 2009).
Despite the recent encouraging research initiatives on
customer-based BE in T&H, it is questionable that such
attempts substantiate a general research framework that effec-
tively conceptualizes domain-specific phenomena. Seldom
have there been rigorous endeavors to develop a conceptual
framework based on original information sources of BE in
the discipline. Also seriously lacking in previous T&H BE
studies are efforts to validate the research model(s) being
adopted, examined, or proposed. Moreover, tests of the pro-
posed model for generalizability across traveling customers
from different cultures remained largely unexplored even if
the nature of the T&H industry was essentially global.
Developing a customer-based BE model and its tracking sys-
tem in and for a global marketplace is increasingly impor-
tant, especially for the T&H industry, because more and
more firms will seek competitive advantage on a global scale
(Kish, Riskey, and Karin 2001; Yoo and Donthu 2002).
This study attempted to address the issues above and pro-
pose a reliable model for future tourist-based BE research.
As in previous research, this study builds a model based
mainly on the conceptual work by Aaker (1991) and Keller
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(1993, 2003a). However, it is different from the previous
studies in that it (1) conducted focus groups to confirm Aaker’s
and Keller’s proposed model constructs and to generate spe-
cific measurement items in the study context; (2) developed
new domain-relevant constructs and measurement items and
incorporated them into the proposed model; and (3) vali-
dated the model across gender, brand familiarity, and country
of origin of the sample travelers, the three variables selected
from the literature that could potentially moderate the model
structure. In line with previous studies, we also attempted to
rationalize a causal order of the model constructs with
empirical supports. Finally, this study incorporated BE of
both well-established international and domestic chain hotels
and well-known independently managed hotels in develop-
ing the research model, based on the data collected from sev-
eral major Chinese cities where competition among these
business camps were growing intensely.
Building Blocks of
Customer-Based Brand Equity
Keller (2003a) defined customer-based BE as “the differen-
tial effect that brand knowledge has on consumer response to
the marketing of that brand” (p. 60). Compared to a ficti-
tiously named or unnamed brand, a brand with equity gener-
ates differences in consumer responses. BE in this sense
could be positive or negative; the positive equity leads the
customer to more accepting a new brand extension, being
less price-sensitive, and more advocating the brand when
facing alternative offers, while the negative equity causes the
customer to respond less favorably to marketing activities
for the brand. Consequently, the key to measuring customer-
based BE is to understand the sources of brand knowledge
and the differential advantages they create for the brand.
Keller (2003a) also stressed a process aspect of building
BE in four steps. First, marketers need to understand how the
customer identifies the brand that satisfies her needs, which
is often operationalized as awareness or salience. Once a
brand is identified, the customer tends to proffer a meaning
to the brand based on its performance and the customer’s
personal characteristics, giving rise to image associations.
Developed in the third stage are the cognitive and emotional
responses that form judgments of brand quality and percep-
tions of brand personality. The customer finally becomes
attached, engaged, committed, and loyal to the brand when
the first three steps repeat. Although this process perspective
makes sense particularly when BE is tracked longitudinally,
in reality the first three components of brand knowledge—
awareness, imagery, and quality perceptions—often do not
occur sequentially one at a time. They tend to feed back to
each other, especially when the customer is relatively unfa-
miliar with the brand, and eventually develop into the fourth
stage—brand loyalty—through repeated positive reinforce-
ments. Aaker (1991) also viewed brand awareness, brand
Hsu et al. 83
associations, perceived quality, and brand loyalty as four
common sources of BE (also see Bailey and Ball, 2006, and
Xu and Chan, 2010, for hotel-specific meanings of BE).
Brand Awareness
Brand awareness is “the ability of a potential buyer to recog-
nize or recall that a brand is a member of a certain product
category” (Aaker 1991, p. 61). According to Aaker, aware-
ness generally intensifies from no awareness to recognition
to recall to top-of-mind. Keller’s (2003a) conceptualization
of brand salience captures brand awareness broadly as it
relates to “how often or easily the brand is evoked under
various situations or circumstances” (p. 76).
Brand awareness seems to be an important source of
brand knowledge or BE. It can develop into a strong brand
image, strengthen brand familiarity leading to brand liking,
signal the customer’s commitment to the brand, place the
brand in the consideration set, and increase choice advantage
(Aaker 1991; Keller 2003a). While several researchers pro-
posed brand awareness as a direct antecedent of BE—that is,
brand awareness not conceptualized as a component of BE
(e.g., Berry 2000; Prasad and Dev 2000), other empirical
results showed that brand awareness, along with other brand-
related attitudes, could positively influence future brand
choice and market share (Srinivasan, Park, and Chang 2005).
Hence, based on Keller’s (2003a) staged view and these
empirical results, it seems logical that the effect of awareness
on the consequences of BE, such as brand choice, is fortified
when valence-neutral awareness (“cognitive”) is internal-
ized into brand-related attitudes such as brand loyalty
(“conative”) (Konecnik and Gartner 2007). The elaboration
likelihood model also suggests that awareness may be
strongly associated with choices and “behavioral loyalty”
when involvement is low without strong internalization
(Dick and Basu 1994). Apparently, brand loyalty results par-
tially from strong brand awareness; thus, it is expected that
brand awareness is positively related to brand loyalty.
Brand Image
Often interchangeably referred to as brand associations, brand
image is a set of associations usually organized in some
meaningful way in consumer memory and represents percep-
tions that may or may not reflect objective reality (Aaker
1991, pp. 109-110; Keller 1993, p. 3). Both Aaker and Keller
vividly presented a complicated structure of brand image that
could be summarized into several marketing implications or
values. First, brand image and associations are formed in
ways to help process or retrieve information related to the
brand, providing the customer with reasons to buy. Second,
the customer differentiates one brand from another, based on
uniqueness of the brand’s image or associations with other
objects. Image and associations may also create positive attitudes
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and feelings through spreading activation that are conducive
to commitment, loyalty, and choice (Janiszewski and Osselaer
2000). Finally, brand image or associations are a primary basis
for brand extension because the extension brand’s acceptabil-
ity is judged largely by the degree of fit between the mother
and extension brand, as shown in brand extension studies (e.g.,
Jiang, Dev, and Rao 2002; Klink and Smith 2001; McCarthy,
Heath, and Milberg 2001).
According to attitude theory (Fazio 1989), corporate
image is associated with evaluative attitudes, such as cogni-
tive and emotional loyalty. Empirical results support that cor-
porate image was found to determine customer loyalty both
directly and indirectly through customer satisfaction and that
its effect was substantial particularly when customer satis-
faction was not modeled together (e.g., Hart and Rosenberger
2004). Other studies reported that both image and satisfac-
tion were positively associated with loyalty, even when sat-
isfaction sharing a large amount of variance with image was
modeled simultaneously (e.g., Brunner, Stocklin, and Opwis
2008). Therefore, it is expected that brand image is posi-
tively associated with brand loyalty.
Perceived Quality
Aaker (1991) and Keller (2003a) defined perceived quality
in the branding context both as the customer’s perception of
overall quality or superiority of a product or service with
respect to its intended purpose and as an intangible, overall
feeling about the brand. The definition is in line with that of
perceived performance in other research areas such as cus-
tomer value (Zeithaml 1988), service quality (Parasuraman,
Zeithaml, and Berry 1988), and customer satisfaction (Oliver
1997). The concept summarizes the attitudes, both cognitive
and emotional, that the customer holds toward the brand.
Aaker (1991) argued that perceived quality often become a
customer’s reason to buy, differentiate the brand’s position
from competitors, give the marketer an opportunity to
charge a premium price, and enhance the process of brand
extensions.
The quality–loyalty link is one of the most frequent
research topics in marketing. As Aaker (1991) argued, the
customer is likely to become loyal to a brand if the brand
offers, based on its high quality, a good reason to buy repeat-
edly and provides a unique purchase experience that is
unavailable from competitors’ offers. This may be true even
at a premium price. The well-known PIMS (Profit Impact of
Market Strategy) study by Buzzell and Gale (1987) provided
evidence that perceived quality affected market share and
profitability over time. Customer value theory also supports
the quality–loyalty reasoning in that brand name influences
quality perceptions that, in turn, determine willingness to
repurchase (Rao and Monroe 1989). Another set of evidence
arises from indirect effect models that show that quality
influences loyalty indirectly through customer value and/or
84 Journal of T  ravel Research 51(1)
satisfaction (e.g., Lai, Griffin, and Babin 2008). In the
absence of value and satisfaction in a model, therefore, per-
ceived quality is expected to show a direct, positive associa-
tion with customer loyalty.
Brand Loyalty
Brand loyalty is “a measure of the attachment that a cus-
tomer has to a brand” (Aaker 1991, p. 39). According to
Oliver (1999), loyalty is “a deeply held commitment to rebuy
or repatronize a preferred product/service consistently in the
future, thereby causing repetitive same-brand or same brand-
set purchasing, despite situational influences and marketing
efforts having the potential to cause switching behavior”
(p. 34). Although Aaker (1991) and Keller (2003a) presented
brand loyalty as a component of BE, in practice many
researchers have modeled it as a summary endogenous vari-
able determined by brand awareness, brand image, and/or
perceived quality (e.g., Brunner, Stocklin, and Opwis 2008;
Lai, Griffin, and Babin 2008). Thus, brand loyalty may func-
tion as a key summary construct of BE. We followed these
studies in conceptualizing our basic research model, then
extended the model through preliminary qualitative studies,
and validated the proposed model with empirical data col-
lected from travelers to major cities in China.
The Study
We used both qualitative and quantitative approaches to
develop a BE model. For scale development, we generally
followed the traditional guideline by Churchill (1979) for
developing measurement scales, an updated paradigm for
marketing scale development by Gerbing and Anderson
(1988), and practical scale development research examples
in services marketing (Parasuraman, Zeithaml, and Berry
1988) and travel research (Oh, Fiore, and Jeong 2007). The
study consists of largely two parts. First, qualitative studies
such as focus groups, expert reviews, and a pilot study were
used to develop preliminary scales. Second, the luxury hotel
industry segment was selected as the target sample setting
for this study. We conducted a consumer survey with travel-
ers staying at the participating hotels to collect data for vali-
dating the proposed BE model.
Focus Groups
Two focus groups were conducted with reference to the guide-
lines by Krueger and Casey (2000) and Stewart, Shamdasani,
and Rook (2007). The objectives were to (1) confirm whether
the four major components of BE reviewed above were
applicable to global brand competition; (2) identify, if any,
other potential, major determinants of BE in the target set-
ting; and (3) generate initial measurement items of the
confirmed/identified BE constructs. One group was conducted
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in the Chinese language with 10 Chinese domestic travelers
who worked and lived in Beijing. The group included seven
men, and eight of the participants were aged between 30 and
60 years; they were frequent travelers for various purposes,
with nine of them traveling more than five times a year for at
least one overnight stay. The other focus group was con-
ducted in English with eight foreign travelers who visited
Beijing for an international conference. Four of the partici-
pants were male and seven aged more than 36; they also
were frequent travelers, as six of them traveled at least five
times a year. When asked in the exit survey whether the
group discussion and members’ opinions reflected reality
(1 = strongly disagree to 5 = strongly agree), the Chinese
group gave 4.5 and the English group scored 4.75.
The two focus groups generally confirmed the content
validity of the four BE components. All discussion contents
were recorded and later transcribed. Two trained coders
sorted independently the responses to each scripted question
into thematic statements by using a word classification grid
developed by the authors. A free elicitation question about
reasons to stay at branded hotels resulted in all four BE com-
ponents and two additional factors, trust in the brand’s man-
agement capability (“management trust”), and the brand’s
consistent and reliable offers over time (“brand reliability”).
The intercoder reliability in this sorting task achieved at least
93%. These focus group results were generally consistent
with the results based on expert interviews (see Bailey and
Ball 2006).
Management trust. Both focus groups suggested repeat-
edly that one important characteristic of a favorable hotel
brand was the customer’s trust in the brand’s management.
For the brands they like and choose, they imparted deep trust
in the capability and practice of the management. When trav-
elers choose a hotel, their knowledge about how the hotel is
managed seems to make a difference. Thus, the traveler’s
knowledge-based trust and confidence in the brand’s man-
agement practice may be an important ingredient for a suc-
cessful hotel brand. They also wanted the management that
is, and that they can hold, responsible if something went
wrong. Although most BE studies have not explicitly included
the concept of management trust in their models, Keller
(2003a) suggested that “credibility in the maker of the brand”
for caring and understanding the customer’s needs as well as
holding the customer’s interests in mind could be a meaning-
ful measure of BE.
The Commitment–trust theory of relationship marketing
provides conceptual sources for the potential role of manage-
ment trust in BE research (see Morgan and Hunt 1994).
Based on Morgan and Hunt’s extensive review and results of
our focus groups, therefore, we define management trust in
the hotel branding context as the customer’s feelings of con-
fidence in and willingness to rely on the management (practice)
of a brand to satisfy her lodging needs. The Commitment–
trust theory posits that both commitment and trust are key
Hsu et al. 85
mediating variables between relationship initiators and out-
comes and that trust develops into commitment over time.
Aaker (1991) suggested that commitment could be a sub-
component of brand loyalty. Thus, it is reasonable to expect
that management trust positively affects brand loyalty.
Brand reliability. Members of the focus groups expressed a
strong desire for psychological comfort based on certainty or
assurance in the product and service they would receive
when they chose a hotel brand. Particularly mentioned was
consistency in the service standard over time as evidenced in
statements such as “you know what to expect . . . ,” “consis-
tent service standards . . . ,” and “more standardized . . . with
no surprise.” Although the BE literature does not clearly
document the role of this type of customer desire, the con-
cept related to consistency in service standards seems to be
important for the service industry. For example, consistency
between the customer’s expectation and the company’s per-
formance was conceptualized as reliability and its signifi-
cance was empirically established in service quality research
(Parasuraman, Zeithaml, and Berry 1994; Parasuraman,
Berry, and Zeithaml 1991). Thus, for this study we concep-
tualize these psychological properties as brand reliability
and define it as the perceived degree of certainty about a
brand’s ability to perform consistently to what the customer
expects from the brand over time.
Brand reliability is likely to contribute to brand loyalty
over time. When a brand is reliable in delivering its perfor-
mance to the customer’s expectation, the customer will per-
ceive high service quality and tend to remain loyal to the
brand (Zeithaml, Berry, and Parasuraman 1996). Brand reli-
ability is complementary to management trust in that it
focuses on the brand’s overall ability to meet the customer’s
expectations repeatedly over time or over repeated brand
purchase occasions. A reliable brand will evoke strong cus-
tomer trust which builds into commitment-like loyalty. Lack
of regularity in service provision is likely to lead to customer
defection.
The Proposed Brand Equity Model
Integrating the results of BE literature review and focus
groups, we propose a conceptual model as depicted in Figure 1.
Our reviews suggested an ordered relationship structure
between brand loyalty and its key determinants. As dis-
cussed and posited earlier, the relationship between brand
loyalty and each of its five key determinants is expected to
be significant and positive. Brand-loyal customers are
expected to choose the brand in high frequency across simi-
lar purchase occasions, especially in the presence of com-
petitive offerings. In a tourism context, travelers who are
loyal to a hotel brand should show a strong willingness to
choose the same brand among many competitor brands
available in the same destination. Hence, we conceptualize
the traveler’s willingness to choose the same brand in the
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Brand Equity
Perceived
Quality
Brand
Awareness
Brand
Brand Brand
Choice
Image Loyalty
Intention
Mgmt
Trust
Brand
Reliability
Figure 1. A customer-based lodging brand equity model
presence of competitor brands as brand choice intention and
use it as a positively related criterion construct in our model
(cf. McCarthy, Heath, and Milberg 2001; Srinivasan, Park,
and Chang 2005).
Instrumentation and Pilot Study
Based on the measurement items generated by focus groups
and literature review, we constructed an initial questionnaire
in English. Following the recommendation on Chinese–English,
English–Chinese back-translation methods in Sin-wai and
Pollard (2001), we ensured translation quality and equiva-
lence in the meaning of words between the English and Chi-
nese versions. Each model construct was measured with
multiple items, all operationalized on a 7-point Likert-type
scale (1 = strongly disagree to 7 = strongly agree).
The questionnaire was refined several times through
expert reviews and a pilot survey. We recruited five Chinese-
speaking (as the first language) and five English-speaking
experts; two of each expert group were current hotel manag-
ers in China and the remaining were active researchers on
hospitality or general BE topics. These experts provided
critical feedback on all aspects of the questionnaire. We
piloted the questionnaire with 30 domestic Chinese and 30
foreign business and leisure travelers drawn from the target
population of the main consumer survey. The pilot study fur-
ther enhanced the transparency of the research questions and
provided preliminary data to gain insights into scale reli-
ability and nomological validity of the proposed model. The
86 Journal of T  ravel Research 51(1)
final questionnaire was customized for each property with its
name specified in the measurement items.
The Consumer survey
Our field consumer survey was designed to focus on both
domestic Chinese and foreign travelers staying at upscale
(four- and five-star or equivalent) hotels in major Chinese
cities. We delimited our sample setting to the upscale hotel
industry in China because there was more intense competi-
tion among luxury hotel brands than among economy hotels.
Although the recent expansion of foreign and domestic econ-
omy hotels in China has been rapid, the “newness” of the
concept to Chinese consumers and of most brands to the
mass market has not yet allowed many brands to establish
themselves and accumulate a significant amount of BE. We
planned to include 15 hotels with domestic Chinese brands
and 15 with foreign brands, with a maximum of two hotels
per brand, to increase comparability as well as generalizabil-
ity of the results across more brands. For a fair representation
of each hotel, we proposed to sample 20 domestic and
20 foreign travelers. This balanced design was to generate
300 domestic participants for domestic brands and 300 for
foreign brands (i.e., 20 travelers/hotel × 15 hotels/category).
The same sample size was expected for foreign travelers
across the two brand categories, for a total sample size of
1,200 travelers. Covering both domestic and foreign travelers
was critical to increasing generalizability of the results, given
the global market situation where this study was conducted.
We contacted five major Chinese domestic hotel corpo-
rate offices, two regional offices of large international hotel
corporations, 10 hotel property senior managers through per-
sonal contact, and the International Branded Hotels Shang-
hai for their support of the project. Corporate and regional
offices were asked to nominate two properties under each
brand to participate in the study. The effort resulted in
32 properties agreed to participate. A set of questionnaires
(30 English and 30 Chinese), a survey instruction, the cover
letter, and 45 small gifts was sent to those 32 properties. The
operators were instructed to preidentify 20 domestic and
20 foreign guests based on check-in records and hand the
appropriate language version of the questionnaire to those
guests the night before their departure. The questionnaire
was distributed in an envelope and the guest was asked to
seal the completed questionnaire in the return envelope and
return to the front desk. The operators were asked to con-
tinue distributing the questionnaire in the same manner until
at least 20 domestic and 20 foreign travelers completed the
survey. Of the 32 hotels, 29 returned completed question-
naires as instructed. The other three hotels under one domes-
tic corporation indicated that the completed questionnaires
were lost in transition. The 29 hotels were from 12 major
Chinese cities; 11 of them were Chinese indigenous brands
while the other 18 were foreign brands.
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Results
The sample (n = 1,346) was skewed moderately toward
male (63.4%), and the majority (85.1%) were between 26
and 55 years old. Although the annual household income of
the respondents showed a sign of broad representation from
US$50,000 or less to more than $150,000, it was difficult to
characterize its distribution accurately as 52% of the respon-
dents did not report their household income. Nearly 51%
finished either 2- or 4-year college education, while approx-
imately 42% completed a graduate degree. The majority
(64%) were married, while 29.8% were single. The two pri-
mary languages spoken by respondents as the first language
were Mandarin (50.7%) and English (31.1%), with 231
respondents reporting various other languages as their
mother tongue. Approximately 70% were traveling on busi-
ness and 20% on vacation. The sample included 656 (48.7%)
domestic Chinese travelers, of whom 318 were sampled
from domestic Chinese hotels and 338 from international
hotels. The remaining 690 respondents (51.3%) were
inbound foreign travelers, of whom 254 were staying at a
domestic Chinese hotel and 436 at an internationally
branded hotel. Of the respondents, 72.3% had stayed with
the brand and 56.3% had stayed in this particular property
before. Respondents had a wide range of travel frequency,
with 57.6% traveling 12 or fewer times per year and a mean
of 28.6 times (SD = 46.8), of which 63.7% were for busi-
ness (SD = 29.3).
Measurement Model
Because an a priori distinct structure of measurement and
model (see Figure 1) was proposed, we first attempted to
ensure via confirmatory factor analysis whether the proposed
model structure was valid (Bollen 1989; Klein 2004). The
goodness of all imposed covariance structures was assessed
based on incremental fit indices such as the comparative fit
index (CFI; Bentler 1990), nonnormed fit index (NNFI;
Tucker and Lewis 1973), and root mean squared error of
approximation index (RMSEA; Browne and Cudeck 1993;
Steiger 1990). We relied on these alternative model fit indi-
ces because the chi-square test was well known to be sensi-
tive to sample size (Schumacker and Lomax 2004). Hu and
Bentler (1999) recommended a cutoff point of .95 or higher
for CFI and NNFI and .06 or lower for RMSEA for a good
model. We checked data for any outlier values and severe
violations of statistical assumptions by using a variety of
descriptive methods.
The measurement model fit the data well, with all three
alternative fit indices satisfying the recommended cutoff
points (see Table 1). Several original items were dropped for
reasons such as low or cross loadings, large measurement
errors, and/or unjustified significant correlations between
error estimates (Klein 2004). As shown in Table 1, all factor
Hsu et al. 87

Table 1. Measurement Model Results (n = 1,219)

Mean (Standard Factor Loading Error (Standard

Construct and Measurement Itema Deviation) (Standard Error)b Error)b
Brand choice intention (ρ =.91,VE = .78, α = .91)
Even if other competing brands are not different from XYZ in any way, 5.09 (1.24) .88 (–) .23 (.02)
  it seems smarter to choose an XYZ hotel.
An XYZ hotel is always a superior choice to its rival hotels. 4.99 (1.25) .91 (.02) .17 (.02)
It makes sense to choose XYZ instead of any other hotel brand, even if 4.90 (1.32) .86 (.03) .27 (.02)
  they are the same.
XYZ is my favorite brand of all competing hotel brands.c
Brand loyalty (ρ = .91,VE = .77, α = .90)
I will choose XYZ hotels over and over again without hesitation. 4.90 (1.42) .82 (–) .32 (.03)
I feel good and positive when I think about staying at an XYZ hotel. 5.20 (1.25) .90 (.02) .18 (.02)
Thinking about the XYZ hotel makes me feel pleasant. 5.17 (1.29) .90 (.03) .20 (.02)
I would not choose other hotel brands if a XYZ hotel is available when I
  need accommodation.
Brand quality (ρ = .91,VE = .77, α = .89)
XYZ is of high quality. 5.55 (1.07) .83 (–) .32 (.02)
XYZ sets quality standards other hotels should follow. 5.32 (1.17) .98 (.03) .22 (.02)
I consider XYZ’s quality to be of the highest standard. 5.17 (1.25) .89 (.03) .20 (.02)
XYZ is regarded as a leader in quality.
Brand awareness (ρ = .92,VE = .79, α = .91)
I know what the XYZ symbol or logo looks like. 5.24 (1.52) .85 (–) .29 (.03)
I know what an XYZ hotel looks like. 5.17 (1.35) .91 (.02) .17 (.02)
I can easily recognize XYZ hotels among other competing hotels. 5.17 (1.41) .91 (.02) .18 (.02)
XYZ is unique and different from other hotel brands.
Brand image (ρ = .89,VE = .66, α = .88)
The XYZ brand is prestigious. 5.24 (1.20) .83 (–) .30 (.02)
The XYZ hotels tend to attract sophisticated people as guests. 5.18 (1.22) .85 (.03) .28 (.02)
Staying at an XYZ hotel makes me feel special. 5.05 (1.28) .87 (.03) .25 (.02)
I have a clear image of the type of people who would stay at an XYZ hotel. 4.74 (1.38) .69 (.04) .53 (.04)
Management trust (ρ = .92,VE = .80, α = .92)
I trust the XYZ management. 5.44 (1.15) .88 (–) .23 (.02)
The XYZ management knows how to do the hotel business. 5.42 (1.15) .92 (.02) .15 (.01)
The XYZ implements good management practices other hotels can 5.29 (1.20) .88 (.02) .23 (.02)
 learn.
XYZ management is sophisticated enough not to ignore customer problems.
Brand reliability (ρ = .92,VE = .80, α = .92)
The XYZ will meet my expectations every time. 5.25 (1.18) .92 (–) .15 (.01)
My experience with XYZ will be consistent every time I stay. 5.27 (1.16) .88 (.02) .23 (.02)
The XYZ will not disappoint me every time. 5.23 (1.22) .88 (.02) .22 (.02)
I feel safe and secure when staying at XYZ hotel.
Note: ρ = construct reliability; VE = amount of variance extracted, based on the formula in Fornell and Larcker (1981) and Bagozzi and Yi (1988).
a. All items were measured on a 7-point scale (1 = strongly disagree to 7 = strongly agree).
b. Entries are standardized estimates, all statistically significant (p < .01).
c. Italicized items were dropped for the reasons explained in the text.
χ2 = 730.8, df = 188, comparative fit index = .99, nonnormed fit index = .99, root mean square error of approximation = .049.

loadings were substantial and error estimates small, except
for the fourth item of the brand image construct. The esti-
mated standard errors for both factor loadings and errors
were comparatively small. These results lend support for
strong convergence of the measurement items to their respec-
tive construct (Bagozzi and Yi 1988). No sign of improper
solutions was present (Boomsma 2008).
The measurement model results further evidenced con-
struct reliability. First, Cronbach’s alpha of internal consis-
tency was high for all constructs. Second, strict construct
reliability of rho was high for all constructs and the amount
of variance extracted for each construct exceeded a sug-
gested minimum of .05 (Fornell and Larcker 1981), thereby
establishing strong convergent validity for the model constructs.

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88 Journal of T  ravel Research 51(1)

Table 2. Structural Model and Cross-Validation Results

Country of
All Samplea Genderb Originc Past Experienced
Structural Path Beta Standard Error t Value Beta t Value Beta t Value Beta t Value
Perceived quality → brand loyalty .18 .05  4.66 .29  5.41 .25  4.96 .20  4.17
ns ns ns ns .15  2.13
Brand awareness → brand loyalty .07 .02  2.54 ns ns .18  4.66 .09  3.00
.14  3.78 ns ns ns ns
Brand image → brand loyalty .26 .05  6.38 .24  4.82 .13  2.36 .27  5.68
.23  3.30 .46  6.79 .22  3.12
Management trust → brand loyalty .23 .04  6.26 .22  4.58 ns ns .20  4.94
.23  4.34 .32  6.40 .30  3.63
Brand reliability → brand loyalty .26 .04  6.89 .21  4.45 .40  7.44 .24  5.71
.40  6.53 .13  2.58 .27  3.36
Brand loyalty → brand choice intention .86 .03 30.94 .83 23.76 .87 24.64 .87 26.21
.90 20.07 .83 19.84 .85 14.76
Note: ns = statistically not significant (p > .05).
a. All sample data: χ2(193) = 887.97, comparative fit index (CFI) = .99, nonnormed fit index (NNFI) = .99, root mean square error of approximation
(RMSEA) = .054.
b. Entries in the first row are for male and those in the second row are for female traveler group: χ2(386) = 1131.99, CFI = .99, NNFI = .99,
RMSEA = .056.
c. Entries in the first row are for domestic Chinese and those in the second row are for inbound foreign traveler group: χ2(386) = 1245.67, CFI = .99,
NNFI = .99, RMSEA = .060.
d. Entries in the first row are for first-time brand user and those in the second row are for repeated brand user traveler group: χ2(386) = 1299.81,
CFI = .99, NNFI = .99, RMSEA = .052.

Third, the discriminant validity of the constructs was evident
as none of the confidence interval of each inter-construct
correlation contained the value of unity (Bagozzi and Yi
1988). Combined, all measurement model results suggested
that the measurement model was sound.
Tests of Rival Models
Although the measurement model exhibited an excellent fit
to the data, we tested three other logically plausible models
that could threaten the uniqueness of the measurement model
structure. It is strongly recommended that theoretically or
empirically rival (or competing) and equivalent models be
tested whenever possible to rule out potentially equal or even
better-fitting models (Thompson 2000). First, whereas the
results of our focus groups indicated that the concepts of
management trust and brand reliability were different sources
of BE—our data also empirically supported their discrimi-
nant validity as discussed in the preceding section—our
review of related literatures implied that these concepts
could share much commonality in their meaning and, thus,
could covary significantly. This gives a logical possibility
that the two constructs could be modeled as one. Such a rival
model resulted in a significantly worse fit than the measure-
ment model, with χ2(194) = 1755.14, CFI = .99, NNFI = .98,
and RMSEA = .081. Second, as shown in Figure 2, both
Aaker (1991) and Keller (2003a) suggested that perceived
quality, brand awareness, brand image, and brand loyalty
were components of BE. Therefore, our second rival model
was to test whether the sources, including both management
trust and brand reliability, of BE could be modeled unidi-
mensionally as one construct. This model resulted in an
unacceptable fit, with χ2(208) = 5975.09, CFI = .95, NNFI = .95,
and RMSEA = .151. Finally, we tested whether the covari-
ance shared among the sources of BE could be modeled into
a second-order construct, instead of a unidimensional con-
struct, to preserve the multidimensional measurement structure
of BE (see Oh, Fiore, and Jeong 2007 for similar rationales).
This rival model fit the data satisfactorily, but less favorably
than the measurement model, with χ2(202) = 932.42, CFI = .99,
NNFI = .98, and RMSEA = .054. For both ease of interpreta-
tion and other practical reasons (cf. Oh, Fiore, and Jeong
2007), this rival model was rejected in favor of the original
measurement model.
Structural Model
The structural model in Figure 1 resulted in a good fit,
χ2(193) = 887.97, CFI = .99, NNFI = .99, RMSEA = .054.
The first three entry columns of Table 2 (“all sample”) pres-
ent the structural model results. The six structural paths were
all statistically significant (p < .05) and positive, confirming
our propositions earlier. A close examination of model
results indicated that the direction and significance of all
parameter estimates were as expected, with no values of
improper solutions. The relationship between brand loyalty

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Hsu et al. 89
and brand choice intention was particularly strong (β = .86,
t = 30.94), while that between brand awareness and brand
loyalty was relatively weak, albeit significant (β = .07, t = 2.54).
The model explained 79% of variance in brand loyalty and
77% of variance in brand choice intention.
In the spirit of testing rival models, we examined a direct
effect model according to the expectation that some of the
direct effects of the BE components on brand choice inten-
tion might be significant (Chan 2007). The structural model
was an indirect effect model in that the potential effects of
the five BE sources on brand choice intention were mediated
through brand loyalty. The direct effect model allowed all
five BE sources to influence brand choice intention in addi-
tion to their indirect effects through brand loyalty, thereby
losing five degrees of freedom. The model fit the data well,
χ2(188) = 730.8, CFI = .99, NNFI = .99, RMSEA = .049;
nevertheless, the relationships between (1) brand image and
brand choice intention (β = .01, t = .25) and (2) brand reli-
ability and brand choice intention (β = .01, t = .14) were sta-
tistically insignificant (p > .10), against theoretical
expectations. More troubling was the relationship between
management trust and brand choice intention that was nega-
tive and significant (β = –.20, t = –4.53). This latter result did
not make sense, particularly given the positive, significant
zero-order correlation between the two constructs. This
could be evidence of improper model solutions (Boomsma
2008); thus the direct effect model was rejected in favor of
the indirect effect structural model.
Validation of the Structural Model
We attempted to validate the structural model by using three
variables that could moderate lodging customers’ percep-
tions of brand performance. Although Thompson (2000) rec-
ommended a random split-half model validation for any
structural equation model, we believed that known moderat-
ing variables were more appropriate—that is, more theoreti-
cal than random—for validation purposes. The rationale was
that theoretical tests of moderating effects should be based
on essentially the same structure of the model. First, we used
gender as one validation variable as male and female were
known to perceive BE differently; male customers tended to
be more loyal while female customers tended to have greater
brand awareness, perceived quality, and brand association
(Chen, Green, and Miller 2008). Second, culture was used in
other BE studies to test invariance of BE models (e.g., Yoo
and Donthu 2002); thus, the traveler’s country of origin (i.e.,
domestic vs. foreign) could provide a proximate context for
model validation, especially because we used two language
versions of the questionnaire. Finally, past experience (i.e.,
new vs. repeated brand users) has been supported for its
moderating effects on brand-related customer perceptions in
both the hospitality and other industries (e.g., Brunner,
Stocklin, and Opwis, 2008; Kwun and Oh 2006; Oh and
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Jeong 2004). The focus of our validation attempts was on the
acceptability of the proposed model structure across these
potentially heterogeneous traveler groups.
The summary results of our model validation appear in
Table 2. The structural model in Figure 1 fit the data accept-
ably across all sets of traveler groups (i.e., male vs. female,
domestic vs. foreign, and new vs. repeated brand users), with
no sign of improper solutions for any group. The pattern of
effect magnitudes (i.e., betas) was generally consistent
across the structural paths and across the traveler groups
examined, although 6 of the 36 parameters (17%) appeared
statistically insignificant. The overall pattern of betas also
resembled that of the all-sample structural model. None of
parameter insignificance occurred in both traveler groups
that were compared; it indeed seemed to occur somewhat
randomly. These results provided strong evidence that the
proposed structural model was generalizable across different
traveler groups examined.
Our cross-group model validation efforts were further
extended to the direct effect model explained above in the
same way we did for the all-sample structural model. In sum,
the direct effect model fit the male–female two-group data
well, χ2(376) = 950.5, CFI = .99, NNFI = .99, RMSEA =
.051, but four direct effect parameters were in the negative
direction (three for male and one for female) showing signs
of improper solutions. Similarly, the two traveler groups
by country of origin resulted in an acceptable fit, χ2(376) =
1,085.4, CFI = .99, NNFI = .99, RMSEA = .056; again, three
direct effect parameters were negative. Finally, the new ver-
sus repeated brand user groups produced a well-fitting direct
effect model, χ2(376) = 945.3, CFI = .99, NNFI = .99,
RMSEA = .050, but two direct effect parameters for each
group were negative. As was in the case of the all-sample
structural model, these results collectively led to a rejection
of the direct effect model in favor of the indirect effect
model.
Discussion and Implications
The overall results of our study provide an overwhelming
support for the validity and reliability of the proposed BE
model for the lodging industry. Given the lack of original
research on BE in T&H, our study could offer both research-
ers and practitioners a lodging-specific, reliable model for
measuring BE. We have observed in recent years several
T&H researchers apply the basic customer-based BE frame-
work of Aaker (1991) and Keller (2003a) or propose a model
without follow-up empirical validations (e.g., Prasad and
Dev 2000). Our research was motivated to (1) first confirm
whether Aaker’s and Keller’s prevailing views on BE were
tenable in the lodging industry context, based on qualitative
studies, and (2) develop a domain-specific conceptual model
of BE. As a result, we found that travelers considered man-
agement trust and brand reliability as critical to their hotel
90 Journal of T  ravel Research 51(1)
brand loyalty and choice. These two concepts as independent
model constructs are somewhat new to the BE literature, not
to mention T&H branding research. Operators need to
include aspects of management trust and brand reliability in
their BE measurement efforts. Our all-sample results indi-
cate that the impact of management trust and brand reliabil-
ity on brand loyalty can be stronger than that of perceived
quality and brand awareness. It also can be as strong as that
of brand image. Thus, future lodging branding and market-
ing efforts in a global marketplace need to emphasize the
company’s trustworthy management practices and ability to
deliver product and services consistently. One example of
trustworthy management practice may be to increase the vis-
ibility of management staff in the service process in an effort
to strengthen the customer’s positive perceptions of direct
access to the hotel’s management for any service issues.
Consistent service deliveries require a high level of coordi-
nation between management and service staffs, based on a
shared understanding of customer needs.
Our proposed model demonstrates strong generalizabil-
ity. First, it encompasses most of the basic building blocks of
BE that have been reported in the branding literature, and it
then adds new dimensions that are deemed critical to lodging
and perhaps hospitality research. Second, its relationship
structure was new to the literature in that brand loyalty was
conceptualized as a consequence of the other BE sources and
conforms to theoretical expectations with no empirically
improper solutions. The test results of the rival model struc-
tures further confirmed that BE needed to be conceptualized
and measured multidimensionally. Third, the model’s empir-
ical measurement properties are sound and it exhibits a
strong internal predictive ability as shown in the amount of
variance explained for brand loyalty and brand choice inten-
tion. Moreover, the model’s structure was replicated in a
consistent pattern with several subgroups of travelers, allow-
ing the model to be potentially generalized across diverse
lodging and hospitality customers. Our study offers both
researchers and practitioners with a measurement model of
BE based on rigorous evaluations for its reliability, validity,
and structural uniqueness. Our model can be used to develop
a meaningful BE index once data are collected repeatedly
over time and the index model can serve as a benchmarking
tool if data collection includes several key competitor
companies.
The tests of rival or competing models were based on
goodness of model fit. It should be noted, however, that
these tests could rely more on other exact test methods such
as the chi-square difference test or comparative fit indices
such as Akaike’s (1987) information criterion (MacCallum
et al. 1993). For example, Akaike’s information criterion
could be used to compare the relative goodness of the differ-
ent measurement model structures we tested and the chi-
square difference test to evaluate the nested models of
indirect versus direct effects. Nevertheless, these methods
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are based on an assumption that the models being tested con-
verged properly; they become unreliable when the models
converged in improper solutions (Ding, Velicer, and Harlow
1995). In testing the rival measurement model structures, we
found that their fits were not acceptable and, thus, did not
need to consider Akaike’s information criterion. All direct
effect models showed signs of improper solutions, implying
that use of the chi-square difference test was inappropriate in
this case.
Conclusion and Suggestions
Taking a marketing perspective, this study offers a new mea-
surement model that is highly reliable for measuring the
components and outcome of lodging brands’ equity. The
model was developed anew for the lodging industry based on
primary qualitative research on actual travelers’ opinions.
We attempted to order the multidimensional constructs
based on a review of related theories and empirical reports,
rather than merely adopting one of many typically unordered
component models of BE. The proposed model was then rig-
orously evaluated for its measurement integrity and struc-
tural soundness as compared to its plausible rival models. In
addition, we validated the model across theoretically sup-
ported contexts accounting for the effects of gender, country
of origin, and past brand experience. All these efforts are
original in the BE literature in general and in the T&H indus-
try specifically.
While our model demonstrated strong internal validities,
some inherent limitations call for additional research. First,
the study population does not represent all guests in upscale
hotels because of the higher possibility of frequent travel-
ers being selected by hotels to participate in the study. Fre-
quent travelers may be more aware of hotel brands and
have stronger image of the brand under study. Future
research could compare the model across frequency of
hotel visitation.
Second, the model needs to receive additional evaluations
to increase generalizability. Our data were collected from 29
upscale hotels operating in 12 major cities in China. Thus,
generalizability of our model to different segments of the
Chinese hotel industry as well as those in other countries is
unknown. In addition, future studies need to assess cross-
product or cross-industry generalizability of our model and
analyze how the structure of the model as well as the role of
each model construct changes. The discovery of the two new
BE constructs in this study counterreflects possibilities of
other variables or concepts that are specific to a product or
industry for building BE.
Third, the proposed model needs to be assessed further
for its nomological and predictive validities by using differ-
ent criterion variables. We used direct measures of brand
choice intention as the criterion variable and our customer-
based BE model exhibited strong criterion validity. It is
Hsu et al. 91
desirable that the model also have predictive relationships
with the company’s various operational and financial results
if it should be adopted as a tool to capture the customer-side
BE (e.g., Kim and Kim 2005). A calculated probability of
brand choice may serve as another interesting criterion vari-
able (Srinivasan, Park, and Chang 2005).
Fourth, future studies may consider further validations of
the proposed model over time. Our data were essentially
cross-sectional, which limits strong assertions about the
ordered structure of the model even if we strictly followed
the literature in deriving such a structure. Longitudinal—
especially panel—study designs will allow opportunities to
validate the model’s stability over time and to assess the
causal relationships among the constructs in more valid
ways. In particular, if other operational and financial data
are collected along a longitudinal administration of our
customer-based BE model, the values of both input and out-
put of the company’s branding efforts can be assessed more
accurately.
Finally, use of the proposed model, and perhaps all
customer-based BE models, becomes more meaningful
when it is developed into a quantifiable index, and the index
is tracked and compared over time within the company,
between competing brands, and across international bound-
aries (Kish, Riskey, and Karin 2001). Once developed, the
index will need to go through rounds of validation in much
the same way our model did in this study and in additional
ways suggested above. Such industry-specific indexing or
score cards will be helpful to operators in advancing industry
practice. Similar approaches are valid and desirable for other
segments of the T&H industry.
Declaration of Conflicting Interests
The author(s) declared no conflicts of interests with respect to the
authorship and/or publication of this article.
Funding
The author(s) disclosed receipt of the following financial support
for the research and/or authorship of this article:
The work described in this article was supported by a grant from
The Hong Kong Polytechnic University (Project No. 8-ZH47).
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Bios
Cathy H. C. Hsu is a professor and associate director of the School
of Hotel and Tourism Management, The Hong Kong Polytechnic
University, Hung Hom, Kowloon, Hong Kong, P.R. China.
Haemoon Oh is a professor and Head of the Department of Hospi-
tality and Tourism Management, Isenberg School of Management,
University of Massachusetts, Amherst.
A. George Assaf is an Assistant Professor in the Department of
Hospitality and Tourism Management, Isenberg School of Manage-
ment, University of Massachusetts, Amherst.