Improving service management in budget hotels

•Eight service attributes of budget hotels were identified and examined.•The attributes were categorized into two types: core and auxiliary attributes.•Both types of attributes influenced customer responses to varying degrees.•Revisiting intentions, rather than customer experience, affected unit performance.•A large-sample field survey was conducted along with data analysis at the unit level.

Budget hotels are an increasingly important sector of the hospitality industry. However, extant research has mainly focused on service management in the luxury sector rather than economy class hotels, and the findings on budget hotels are mixed. In this study, we identified and examined service attributes in the context of budget hotels and demonstrated their impacts on service outcomes and hotel performance at the unit level. Using a large-sample, field survey, we collected responses from 162,757 customers staying at 1259 units of a budget hotel chain in China. We identified eight service attributes from previous studies, and these attributes loaded on two latent factors: core and auxiliary attributes. Furthermore, both core and auxiliary attributes were related to revisit intention, but only auxiliary attributes were associated with customer experience. Revisit intention influenced hotel performance while customer experience failed to do so. In terms of practical implications, budget hotels should use the inventory of service attributes to develop specific strategies for improving their service excellence and financial returns.