As countries around the world gradually reduce their dependence on fossil fuels, electric vehicles are becoming increasingly important and their demand has grown considerably. Many industries have been affected by this growth, and the travel industry is no exception.
Target Market Synergy
Scholars examined the impact of installing Tesla charging posts on 2,774 hotels in Texas from 2015 to 2018. They categorized these sample hotels into luxury hotels (15%), upscale hotels (15%), and mid-priced and inexpensive hotels (70%) based on price and brand positioning, and collected monthly revenue data from these hotels.
The study found that upscale hotels benefited the most from installing Tesla charging posts. This phenomenon was particularly evident after Tesla launched the Model 3.
Dr. Qian Lixian, the first author of the paper, at the Xipu International Business School, attributed this to the fact that upscale hotels share a similar target market with Tesla.
"The findings can be explained by brand synergy. The original version of Tesla's Model series was the luxury sedan Model S, whose target market was high-end customers; whereas after Tesla launched the more affordable Model 3, its target market became mainstream middle-class consumers." He said.
"The Model 3 matches the target market of upscale hotels, while it does not match the target market of luxury hotels. As a result, installing Tesla charging posts benefited upscale hotels more after the launch of the Model 3."
"We believe the difference in benefits is also due to the fact that the emotional connection of upscale hotel consumers to Tesla increased after Tesla's Model 3 launch, while the emotional connection of luxury hotel consumers to Tesla weakened."
"Analyzing this from a brand synergy perspective, we can understand why the installation of charging piles affects hotels in different classes differently. This is why it is important for a company to maintain synergies with the appropriate brand partners."
Impact of neighboring attractions
The study also explored the impact of tourist attractions surrounding the hotel on the relationship between installing charging piles and hotel revenue.
Dr. Qian Lixian said, "Our study shows that installing Tesla charging piles can lead to more revenue for hotels when there are a large number of tourist attractions in the vicinity of the hotel. This phenomenon suggests that tourists from popular attractions will choose to stay at hotels with charging piles, thus increasing hotel revenue."
He said the methodology used in the study could be used to evaluate EV incentives in countries around the world, and that the research team will explore how different brands and types of charging piles can benefit the places where they are installed in the future.
"Policies and consumer attitudes change over time, so it's important to factor in policy effectiveness and changing markets."
In 2021, car rental company Hertz announced that it would be purchasing 100,000 Tesla cars for rental. However, with the surge in demand for electric car rentals in the tourism industry, supporting charging post facilities need to be improved to alleviate travelers' concerns about electric car range.
One solution is to install charging piles at hotels so that travelers can charge their vehicles during nighttime stay periods. But the question is are hotels interested in providing this service?
Scholars from Xijiao Liverpool University and Fudan University have explored this question. This is the first study to quantify the impact of installing charging posts on hotel revenue by analyzing actual hotel business data.