CONSTRUCTING AND MEASURING
THE LUXURY EXPERIENCE-BASED BRAND EQUITY
OF LUXURY RESORT HOTEL INDUSTRIES: A CASE STUDY OF
LUXURY RESORT HOTELS IN TAIWAN AND MACAO
Jui-Ying Hung
Department of Senior Citizen Service Management
ChaoYangUniversity of Technology
Su-Shiang Lee
Department of Leisure Service Management
ChaoYangUniversity of Technology
Ya-Fang Wu
Department of Senior Citizen Service Management
ChaoYangUniversity of Technology
Qian-Hui Yang
Department of Senior Citizen Service Management
ChaoYangUniversity of Technology
ABSTRACT
Taiwan’s tourism industry is characterized by the domestic demand type of foreign trade industry and is also
a vanguard service industry for economic development in Taiwan in the 21stcentury. In addition, the Tourism Bureau,
Rep. of China (Taiwan) in coping with the hotel market changes and future trends effectively guides Taiwan’s hotel
owners to develop their own brand names and features to ensure the hotel industry is in line with international
standards. This topic research therefore aims to through the research method of academic verification and discussion
substantially contribute to achieving the goal of strengthening the national competitiveness and advantage of Taiwan’s
tourism industry and create values of significance.
Keyword: Brand Equity, Star hotel-rating system, Structure Equation Models
further underline the brand equity of the value em-
bedded in the consumers’ mind.
How should a brand featuring a luxury expe-
rience concept be constructed? And through what
way should it be measured? Brand equity with
luxury experience has been view from a variety of
perspectives (Aaker, 1991; Farquhar, 1989; Keller,
1993; Srivastava and Shocker, 1991; Tauber,
1988).In a time when business operations strive for
providing added value, brand equity extended from
product is merely a break even point for enterprise
competition. Niche should be based on self-ex-
tension viewpoint of consumers’ psychology and
Brand research should be a field with a dy-
namic thinking, it is also a corporate strategy
proposed in response to relevant trend develop-
ments, consumer value shift, swift technological
upgrades during a changing process of old and
new concepts in an industrial environment. Urde
(1994) pointed out that corporate operating model
with brand orientation is a key to business’s sur-
vival and sustainable growth in 21st century. But
as tangible products tend to differ less due to rel-
evant information from competitors being acces-
sible easily through modern information technol-
ogy, products can be easily copied and the
threshold for development is lower. Therefore,
function and interest created through physical
products can no longer stand out in a drastically
changing competing environment, and let alone
becoming a market leader of the industry. In ad-
dition, today consumers often refer to added val-
ue of products or service as a basis for their de-
cision to buy (Bailey and Ball, 2006). Moreover,
through added value, they effectively distinguish
it in perception from other brands in the same
category. Hence, extending brand equity through
intangible service and experience will be an im-
portant point in the future. On the other hand, it
is also a key factor for affecting how a brand
equity aspect is formed.
In recent years, to construct of brand equity
in the service industry is becoming a trend for dis-
cussion issue of brands. After Cobb-Walgren,
Ruble and Donthu (1995) first applied Aaker’s
(1991) Brand Equity Measurement Model to dis-
cuss on the hotel industry, this research topics
prompting a great interest in service brand equity.
Results of the research indicated that the “quality
awareness” aspect was not an important indicator
for consumers when assessing hotels, but it had
broken through the established thinking regarding
physical product-based brands when researchers in
Taiwan and abroad were undertaking research on
brand equity since 1980 (Aaker, 1991; Chen, 199
6Farquhar, 1990; Kamakura and Russell, 1993;
Keller, 1993; Trevor, 1998). As of yet, literature
and empirical research related to service brand
equity in Taiwan and abroad is relatively rare
(Berry, 2000Cobb-Walgren, Ruble and Donthu,
1995; Keshav, 1999; Lassar, Mittal and Sharma,
1995; Sharp, 1995). This is because relevant re-
search on the service is a challenging task in gath-
ering information and research design. However,
currently service brand equity is being constructed
like wildfire in the practice circle. Attention is be-
ing paid mainly to strategy concepts of experience
and consumer’s self-extension. There could be
some lag between such conceptual academic theo-
ry research and empirical research and industrial
practice. As such, the present work will explore
and construct a luxury experience-based brand
equity model through a logical, creative, and in-
tegrated research design. What aspects should it
include? And what variables should each aspect
cover? The purpose is to effectively understand
whether there exists a difference between brand
equity of luxury resort hotels (LRHs) and tradi-
tional tangible product-based brand.
Luxury Resort Hotel
Normally industrial pulsation and trends are
formedindifferenttimesandspacesorsocial
environments. The concept of “luxury” derives from
competition approaches of businesses desiring to main-
tain their own leadership in the market through ex-
ecution of a differentiation strategy (Porter, 1985).
Silverstein and Fiske (2003) proposed a New Luxury
strategy, which holds that new consumer psychology is
a new level which goes beyond the product itself or the
object purchased or consumed. In other words, it is sat-
isfaction of a psychological level of a better experience,
a more profound meaning, a more abundant enjoyment,
or an ever-lasting perception. When consumers talk
about luxury and why they purchased luxury products,
Maslow’s (1954) Need-hierarchy Theory may offer ad-
equate explanation and verification. This is because in
the end consumers are driven by their need for “self-ac-
tualization”. This can only be done through realization
of consumer’s dreams - imagine how to upgrade their
life through purchase of luxury products. As a result,
luxury has an apriori quality that relates to personal
expectation of realizing dreams.
“Luxury”, which is an adjective, can ach-
ieve its purpose only through conveyance of
verbs (such as experience). But this is less easy
to bedefinedthannounswhenbusinesses
stressed on tangible products as a marketing me-
dia or concrete association in the past. It can
produce, through perception of sense and trans-
formation, a kind of personal extensive, unique
imagination by the consumer him/herself entering
into the entire consumption process. Today, luxu-
ry is a dynamic concept which relates to con-
sumer’s experience. It is a self-extension ex-
pression, a media for absorbing experience or
learning new knowledge, and a way of building
a social network in the 21st century.
LRHs should underline “offering different con-
sumers with different services”. That is, it is an in-
tegrated and diverse space where service of extra-
ordinary experience is provided and tourist’s needs are
custom-made and where satisfaction of the body and
mind is valued. The aim is to offer a combined expe-
rience which tourists have never had in their daily life,
in order to enable consumers to get away from their
never-changing lifestyle and fulfill their desire and
leave an ever-lasting, hard-to-replace memory.
As a matter of fact, the representative of “luxury
hotel” in a country often offers a resort experience
which transcends tourist’s imagination, by creating a
wonderful luxury milieu and applying luxury elements
tothesoftwareandhardwareserviceprocess.
Nevertheless, definition and awareness of luxury often
differs from person to person. Criteria for luxury are de-
fined through consumer’s expectations and experience
(Kerr, 2005). As a result, a great many luxury hotel op-
erators and marketing researchers indicate, perception of
experience is more important than tangible character-
istics and interest. Moreover, luxury of the 21st century,
a multiple concept, is an enjoyment which ordinary con-
sumers can afford and get access to. It is also a direc-
tion which LRH operators or researchers should give
serious consideration to in offering service and drafting
business philosophy.
Brand equity of customer-based luxury experience
Covered dimensions and development of
customer-based brand equity are formed in re-
sponse to different economic environments. In the
beginning of the 18th century, brand merely re-
ferred to the ownership of a product. It was not
until the beginning of the 1980s when “brand
equity” was paid attention to by America’s in-
dustry (Barwise, 1993). In the academia, Aaker
(1991) first constructed a systematic and all-em-
bracing brand equity dimension. From then on,
theory and empirical research on brand equity be-
gan to emerge and draw attention. However, as
industry develops and business types change, the
content symbolized by brand equity is shaking
off the established image which conventionally
relates to tangible products. Instead, it represents
an intangible concept of experience, spiritual sat-
isfaction, and self-actualization.
BrandEquityis adynamicthinking.
Dimensions covered and perspectives discussed
must also maintain “flexibility”. If brand equity is
discussed and measured only with a universal
standard, it would not only not be able to clearly
and deeply have an insight into the importance of
brand equity to the industry, but it would also
neglect the fundamental existence value and basic
principle of brand equity. That is, brand equity
should value development, not maintenance. As a
result, this section will discuss, by different peri-
ods, the historical meaning of brand equity with
economic development background, business op-
erating points, consumer needs, etc.
Aaker (1991) later interpreted brand equity
by combining consumer’s attitude and behavioral
dimension. She suggested using 5 brand-earnings
multipliers - including Brand Loyalty, Brand
Awareness, Perceived Quality, Brand Association,
and other Brand Assets (e.g. patents, logos, chan-
nel relations) - formed by brand equity dimensions
to measure brand equity and mentioned con-
tributions of brand equity to customers and the
business itself.
In respect of service-based brand equity
construction or measuring dimensions, by con-
trast, products consumed by consumers are based
on service, while brand equity is measured with
non-functionaladdedvalueorextensiveness
(Table 1). Consequently, this study will focus on
luxury experience-based brand equity dimensions,
which will be divided into two parts. First, con-
ventional brand equity brand dimensions (Aaker,
1991; Keller, 1993) will be viewed as a con-
structive factor of fundamental functional value
for service brand equity. Secondly, extended
non-functional value will combine, through an
experience concept, literature related to industry
characteristics of LRHs. After compilation, it will
be applied to discussions on measuring factors of
LRHs.
Table 1. Induction of Brand Equity and Service Brand Equity
Brand equity
Developed decadeEarly 1980’s
Late 1990’s
Service brand equity
Key points
Ownership
The brands providing tangible
products
Yes
The brands providing intangible service or mainly focusing
on experience.
No. Relies on feelings felt during the service process, as
well as the feeling and lasting memories produced after
consumption.
Development
Experience Value
Has already formed the consensus Still in its initial development stage, and relative studies
brand-equity schema (Aaker, 1991; are all based on the basic model of brand equity. There
Keller, 1993)is still no common concept model available.
“progression concept of economic value” regard-
ing development stages of economic pattern. They
Trend expert Ohmae (2006) says in his book
“M-shape Society”, “Luxury” and “Experience”
are two strongly related words. Luxury is a
non-functional value which goes beyond physical
products. It is a self-actualization in which con-
sumers attempt to transcend or shake off their set
pattern in their daily life. Despite so many ad-
jectives, luxury is impossible to completely realize.
Its extended value effect can be achieved only
when a consumer “experiences” the process by
transforming relevant memory, milieu and feel
through his or her consciousness.
Pine II and Gilmore (1998) also proposed a
discussed the development context of economic
value progression using 3 dimensions - competi-
tion (with or without differentiation), pricing (at
normal price or higher), and customer needs.
Mathwick, Malhorta and Rigdon (2001) believed
that consumers can use the value directly when
they experience in consumption through product
propertiesandserviceperformance.There-
searchers also proposed a customer self-oriented
experience value type frame by classifying experi-
ence value into 4 dimensions: playfulness, aes-
thetic, consumer returning investment (CROI), and
service excellence (Table 2).
Intrinsic value
Extrinsic value
Table 2. experience values model
playfulness
consumer return on investment
Active value
aesthetics
service excellence
Active value
Source: Mathwicka, et al, (2001).
Construction of customer-based luxury experience
brand equity
As a majority of research divides brand
equity measuring dimensions into Fundamental
Functions and Extended Non-functions (Aaker,
1991;Blackson,1992;Chen,1996
Cobb-Walgren, et al, 1995; Kamakura and Russell,
1993; Keller, 1993, 1998; Park and Srinivasan,
1994), the present work adopts these two types of
dimensions, complete with “Fundamental Extrinsic
Value” and “Extended Intrinsic Value”, in order to
construct the basis for measuring luxury brand
equity(LBE) of LRHs(Table 3).
• Fundamental Extrinsic Value (FEV): Consumers
may obtain basic and necessary value perceived
through brand (including business organization
association, brand awareness, brand loyalty, or
brand personality). As far as construction of
brand equity of this study’s subjects (LRHs) is
concerned, by combining customer-based brand
equity dimensions (Aaker, 1991; Chen, 1996;
Keller, 1993) with the industrial characteristics
of the hotel industry, more fundamental extrinsic
valueofproductsandservicecontentis
provided.
• Extended Intrinsic Value (EIV): After customers
experience the process, there may be a differ-
ence between perception produced with the
brand and evaluation of the brand through rele-
vant media by extending a value reference group
via a psychological level actually obtained
through the brand. Therefore, in constructing rel-
evant measuring indicators, it is not possible to
make adequate expressions with accurate di-
mensions or indicators. In this case, only factors
including brand luxury perception, experience
value, and uniqueness, etc. are compared. Such
values will be constructed principally based on
consumer’s perception, brand image molded by
business,orotherperceptionsofmost
consumers.
Concept
Table 3. operational definition
Operational DefinitionMeasurement Variable
Source
Brand loyalty previous experience of the use and pur-Trustiness, imagination, reputationAaker(1991)
Brand
awareness
Organization
associations
chase of from previous experience inand brand alternative
the use and purchase of customers
potential brand recognition and recallAwareness level, marketing media,
ability of consumers’ which can provide consumer association and perception
a kind of brand familiarity and commit-
ment to choose product and service
Consumer associates the brand fromBusiness whole imagination and abil-
memory, such as brand characteristic,ity, business social responsibility
consumer value, using method and
product category. It’s the most accept-
able brand equity help consumer deal
information and format product posi-
tioning
Cobb-Walgrenet al.
(1995)
Baker(2000)
Kotler(2007)
Brand
personality
Perceived
brand luxury
Experience
value
Brand is a combination of personalityLiving, stable, moderate and affable Aaker(2001)
traits similar to human performance,
and brand personality is unique
Perceived luxury is a personal percep-perceivedconspicuous,perceivedSeringhaus(2002)
tion which relative to others or for the unique, perceived quality supreme,Vigneron(2004)
consumers’ perception of an atmos-perceived delighted and perceived
phere formed by a subjective valueself extension
judgments
consumers through engage the marketPlayfulness, aesthetics, consumer re-Mathwicket al.(2001)
and direct use of the product attributes turn on investment and service ex-Baker(2006)
and service performance objectives tocellence
achieve the psychological feelings of
consumption
UniquenessIndustry in the market forms the basis Design, excellent exterior building,
for strategic positioning and forminggeographical location and transport
difference, unique industry, and con-accessibility, meet consumer expect-
sumption style. each industry or busi-ations for luxury and repurchase in-
ness / brand has its unique resourcestention
or capabilities just enough to lay the
business council for sustainable devel-
opment and competitive advantage
LBEBrand equity is aimed to two targets1. price premium effect
(business and consumer) to supply2. quality supreme perception
value. This investigation classified to3. market exclusivity
explore and build brand equity as the4. searching cost reduce
main purpose.5. brand extension
6. brand innovation
7. brand distance
8. overall evaluation of brand
Aaker(1991)
Cobb-Walgrenet al.
(1995)
Feldwick(1996)
This study issued 430 and 440 copies of
questionnaire in Taiwan and Macao, respectively,
with effective response rates 99.07% and 96.59 %(
Table 4). Besides, in order to make sure the rea-
sonability of the construct validity of the measuring
variable of each factor, determination would be
made with confirmatory factor analysis (CFA)
based on critical values of test statistics proposed
by Joreskog and Sorbom (2000).
Taiwan
Survey area
Table 4. survey result
Extending questionnaire number Effective number
430426
Effective ratio
99.07%
The Lalu(sun moon lake)
Hotel royal Chiao hsi
Fleur De Chine
Landis Resort
Macao
ALTIRA
MGM Macao
Wynn Macao
The VENETIAN Macao
100
185
111
34
440
20
56
58
308
96
181
115
34
425
20
53
55
297
96%
97.84%
96.52%
100%
96.59%
100%
94.64%
94.83%
96.43%
According to Table 4 result, the proportion
of men and women is 54.23% and 45.77% in
Taiwan than the ratio presented (69.88:30.12%) in
Macao. For the factor of age, the age of the re-
spondents concentrated in young adults of pas-
sengers (30~49) in Taiwan, unlike those con-
centrated in middle-aged and senior citizens of vis-
itors in Macao luxury resort hotels. The phenomen-