The Economics of Quality in the Hotel Business

Abstract

There are few empirical studies on the economics of quality, and case studies and anecdotes dominate current research. This paper proposes that quality requires resources (input) and that quality has positive effects on economic performance (output). The study is based on quality ratings from 400,000 customers and detailed accounting information from more than 500 hotels. It demonstrates both that quality has positive effects on the hotels' economic performance and that superior quality requires economic resources.