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Does uncertain demand affect service quality?
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DOI：10.1016/j.ijhm.2015.01.013.png)
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Abstract
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The purpose of this article is to investigate the impact of demand uncertainty on labor intensity as well as service quality. Theoretical predictions are mixed: on the one hand, risk aversion leads hotels to choose a lower level of capital in response to demand uncertainty, thereby leading to higher labor intensity; on the other hand, the demand-enhancing benefit of service quality may be weakened due to demand uncertainty, thereby leading to a lower service quality decision. Using the data of international tourist hotels in Taiwan, this article shows that demand uncertainty leads to a positive impact on hotels' labor intensity. In addition, hotels located in markets with a higher degree of concentration, having more diversified revenue sources, or belonging to hotel chains also tend to exhibit higher labor intensity. (C) 2015 Elsevier Ltd. All rights reserved.
Keywords:
Uncertain demand
Capital-labor ratio
Service quality
Hotel industry
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