Factors Shaping Budget Hotel Booking Intentions in Malaysia: Regional Implications for Indonesia

Factors Shaping Budget Hotel Booking Intentions in Malaysia: Regional Implications for Indonesia

Intan Nazierah Rosli¹, Fadhilah Zainal Abidin², Ananta Budhi Danurdara³

¹CK Vacation Sdn Bhd, Malaysia

²Faculty of Hotel and Tourism Management, UiTM Cawangan Kampus Bandaraya Melaka

³Politeknik Parwisata NHI Bandung, Indonesia

DOI: https://dx.doi.org/10.47772/IJRISS.2025.909000450

Received: 08 September 2025; Accepted: 13 September 2025; Published: 14 October 2025

ABSTRACT

Budget hotels remain a vital segment in Malaysia’s hospitality industry, particularly in destinations such as Melaka, where both domestic and international arrivals continue to grow. This study examines the factors shaping travelers’ booking intentions toward budget hotels, focusing on price, location, electronic word-of-mouth (eWOM), and safety and security. Using a structured questionnaire, 150 valid responses were collected and analyzed through multiple regression. The findings reveal that eWOM is the strongest determinant of booking intention, followed by safety and security, while price shows only a marginal effect, and location is not significant. These results highlight a post-pandemic shift in traveler behavior, where digital trust and visible safety assurances outweigh traditional considerations such as affordability and geographical convenience. Although the data are limited to Malaysia, the study provides regional implications for Indonesia, where budget hotels similarly play a critical role in supporting mass tourism. Strengthening online reputation management and implementing transparent safety protocols are recommended strategies for budget hotels across both countries to enhance traveler confidence, satisfaction, and loyalty.

Keywords: Budget hotel, Booking intention, eWOM, Price sensitivity, Safety and security

INTRODUCTION

Background of Study

In the first quarter of the year 2023, Malaysia welcomed 4.5 million tourist arrivals, with a significant number of visitors coming from ASEAN countries (Mail, 2023). Based on the statement by State Tourism, Heritage, and Culture Committee chairman Datuk Muhammad Jailani Khamis (2023), Melaka has emerged as one of the most visited destinations by tourists. In the previous year, Melaka experienced a significant increase in tourist arrivals, with a remarkable 126.76% rise compared to the same period in 2021 (The Vibes, 2023). The author added that, out of the total number of tourists, which amounted to 5.6 million, a significant portion comprised domestic tourists, highlighting the appeal of Melaka among local travelers. Additionally, the presence of 406,517 foreign visitors further emphasizes the popularity of Melaka as a sought-after tourist destination (The Vibes, 2023). Similarly, in Indonesia, budget accommodations also play a crucial role in supporting domestic and international tourism. Destinations such as Bandung, Yogyakarta, and Bali rely heavily on budget hotels to cater to mass tourism and student travelers. Wardhani, Kusumawardhani, and Ubaidillah (2021) highlighted that in Semarang City, budget accommodation not only attracts price-sensitive travelers but also competes through service quality and location advantages. This indicates that both Malaysia and Indonesia share a common reliance on budget hotels to support affordable tourism, while also facing the challenges of meeting rising traveler expectations in terms of safety and digital credibility.

There were more than 5.17 thousand hotels in Malaysia (Statista, 2023). There have also been over 176 budget hotel operators in Melaka (Bakar, 2021). Budget hotels were popular with mass tourists and middle-income business travelers due to their low costs, competitive prices, standardized facilities, and limited services (Li et al., 2022). In Malaysia, the Ministry of Tourism and Culture has classified budget hotels as two stars and below, and they have also introduced the Orchid Classification Scheme for hotels that did not qualify for any star rating (MOTAC). The concept of “budget” hotels could be further categorized into three segments: the new budget hotel system, traditional budget hotels, and upper-tier budget hotels, which were not considered as one homogeneous product grouping (Yaacob, 2020).

Booking intention is the probability or willingness to book a product or service (Emam & Abdelaal, 2021). Booking online and offline are both necessary channels in hotel booking methods. Some travelers rely on offline booking hotels, such as walk-in, telephone, fax, or the reservation center. Some travelers rely on online hotel bookings, such as OTA, Internet, etc. (Teng et al., 2020). The hospitality industry uses booking intention to measure the possibility of a client booking a hotel stay or accommodation through online travel intermediaries or other channels (Emam & Abdelaal, 2021). It shows a traveler’s interest and dedication to a product or service, crucial to understanding consumer behavior and decision-making. Price, simplicity of use, trust, and online reviews might affect booking intention and hotel business success (Emam & Abdelaal, 2021).

Problem Statement

Malaysia’s tourism industry is a major contributor to GDP and employment, but the budget hotel sector faces intense competition and post-pandemic challenges (Sangaran & Selvanayagam, 2021). Traditionally, factors such as price and location were viewed as the most critical drivers of hotel booking (Mahdzar et al., 2021). However, with rising health concerns and digital dependence, travelers increasingly rely on eWOM and safety assurances when selecting accommodations (Roy, 2023; Li et al., 2022). Despite this shift, few empirical studies in Malaysia have simultaneously compared the relative influence of these factors. Moreover, evidence on whether digital trust (eWOM) and perceived safety now outweigh traditional considerations (price, location) in shaping booking intentions is limited, particularly in Melaka, a heritage destination with 176 budget hotels serving both domestic and foreign tourists. Addressing this gap, this study investigates the relationship between price, location, eWOM, and safety and security with travelers’ booking intentions in the Melaka budget hotel market.

Research Objectives

1. To examine the relationship between price, location, Electronic Word-of-mouth (eWOM), safety and security variables, and booking intention on a budget hotel.
2. To examine the most important factor that influences travelers’ intention to book a budget

Significance of Study

This study contributes to academic knowledge by examining how price, location, electronic word-of-mouth (eWOM), and safety influence travelers’ decisions when selecting budget hotels. The findings enhance scholarly understanding of consumer behavior in the budget accommodation sector and provide a valuable reference for future research in tourism and hospitality studies. From a policy perspective, the results offer practical insights for government agencies to strengthen the competitiveness of budget hotels. Policymakers may draw upon these findings to design strategies and regulations that support the growth of low-cost lodging, reinforce safety standards, and promote sustainable tourism development.

For practitioners, particularly budget hotel operators, this study highlights the importance of prioritizing digital reputation and safety alongside competitive pricing. The findings emphasize that travelers increasingly value online credibility and visible safety measures when making booking decisions. By enhancing service quality, encouraging positive online reviews, and implementing transparent safety protocols, budget hotels can improve customer satisfaction and foster stronger loyalty. Collectively, these efforts not only enhance the competitiveness of individual operators but also contribute to the overall resilience and advancement of the budget hotel industry.

LITERATURE REVIEW

Travelers’ booking intentions are shaped by factors ranging from traditional economic considerations such as price and location to emerging influences like electronic word-of-mouth (eWOM) and safety perceptions. The budget hotel segment, which caters primarily to cost-sensitive and experience-driven travelers, provides a unique context to examine these determinants. However, the relative importance of these factors remains debated, especially in the post-pandemic environment where digital credibility and safety assurance have become more prominent.

Budget Hotels

Budget hotels are typically defined as low-cost accommodation offering standardized but limited services to mass tourists and middle-income business travelers (Li et al., 2022). Although traditionally positioned as a price-sensitive segment, recent studies caution against treating budget hotels as homogeneous products. Different formats, ranging from traditional low-cost properties to upgraded budget chains, cater to varying traveler expectations (Yaacob, 2020). In Malaysia, budget hotels represent a significant portion of accommodation supply, with Melaka hosting more than 176 operators, underscoring their economic and cultural importance.

Price

Price remains one of the most frequently cited drivers of hotel choice. Studies in Thailand and Malaysia (Yaacob, 2020; Mahdzar et al., 2021) confirm that affordability strongly shapes decisions, with value-for-money perceptions often outweighing service quality. However, some scholars argue that price sensitivity is declining among younger travelers, who balance cost considerations with social validation and digital reviews (Masiero et al., 2020). This raises the question of whether price continues to dominate booking intentions in digital hospitality. In the Indonesian context, Adato, Pramono, and Purwanto (2020) found that while affordability remains an important driver, travelers also evaluate intangible service attributes when deciding to stay at budget hotels. This suggests that although price is critical, Indonesian travelers tend to balance cost with perceived value and overall service experience, a trend that parallels findings in Malaysia.

Location

Traditionally, location has been considered a critical success factor in hospitality (Ahmad et al., 2018). Proximity to attractions, transport hubs, and business districts typically increases a hotel’s appeal. Yet, more recent findings suggest location may be less decisive for budget-conscious travelers who prioritize affordability and online reputation over convenience (Yaacob, 2020). This contradiction underscores the need to re-examine the relevance of location in shaping booking decisions, especially in compact destinations like Melaka, where most attractions are within short distances.

Electronic Word-of-Mouth (eWOM)

The digitalization of tourism has transformed decision-making processes. eWOM, like online reviews, ratings, and recommendations, has primarily influenced booking intentions (Woon & Ban, 2019; Sulthana & Vasantha, 2019). Positive reviews enhance perceived trust and credibility, reducing risk in low-cost accommodations where service quality may be uncertain (Muhammad & Karim, 2020). However, the impact of eWOM may vary depending on traveler demographics and digital literacy, suggesting a need to contextualize its relative importance against traditional factors like price and location. Evidence from Indonesia similarly emphasizes the growing influence of online credibility. Zahidah and Rostiani (2021) demonstrated that Indonesian travelers who actively seek online reviews are significantly more likely to proceed with bookings. Their study concluded that eWOM enhances trust and reduces perceived risks in budget accommodation, reinforcing its role as a powerful determinant of booking intention. This resonates strongly with the Malaysian context, where peer-generated content increasingly shapes consumer decision-making.

Safety and Security

Safety is a fundamental requirement in hospitality, influencing both satisfaction and booking behavior (Roy, 2023). Research consistently shows that travelers, especially female and international visitors, will avoid hotels perceived as unsafe regardless of affordability (Yaacob, 2020; Adato et al., 2020). Given rising concerns over health, hygiene, and security in the post-COVID-19 era, safety and security may now play an even stronger role in shaping booking intentions compared to pre-pandemic studies. Indonesia has also introduced formal initiatives to address travelers’ safety concerns. Through the Clean, Health, Safety, and Environment (CHSE) certification program, the Ministry of Tourism and Creative Economy encourages hotels, including budget operators, to adopt visible hygiene and safety protocols. This aligns with travelers’ expectations for reassurance in the post-COVID-19 era and highlights a regional trend across Southeast Asia where safety standards are increasingly viewed as essential for building trust in budget accommodations.

While numerous studies have examined these four determinants individually, few have simultaneously compared their relative influence in the Malaysian budget hotel context. Traditional factors (price, location) have been well-documented, but emerging evidence highlights a shift toward digital trust (eWOM) and safety concerns in shaping traveler behavior. Given Melaka’s status as a top tourism destination with a large concentration of budget hotels, this study addresses a critical gap by assessing which of these factors most strongly influences booking intention in the post-pandemic era.

Theoretical Framework

Figure 1: Theoretical framework for Travelers’ Booking Intention

This study applies the Theory of Planned Behaviour (TPB) (Ajzen, 1991) to explain travelers’ booking intentions for budget hotels. TPB suggests that intention is shaped by attitude, subjective norms, and perceived behavioral control. In this research, the four key factors, price, location, electronic word-of-mouth (eWOM), and safety and security, are linked to these components. Price influences attitude. When travelers believe that a budget hotel offers good value for money, their attitude toward booking becomes more positive. Price-sensitive travelers, especially young tourists and students, often view affordability as a major reason to choose budget accommodations (Mahdzar et al., 2021).

Location also affects attitude, as convenience and accessibility can improve travelers’ evaluation of a hotel. It may shape subjective norms too, since recommendations from friends and family often highlight location. However, in compact destinations like Melaka, where attractions are close by, location may not be as important as in larger cities (Yaacob, 2020). Electronic word-of-mouth (eWOM) is closely linked to subjective norms. Online reviews, ratings, and recommendations act as social cues that influence travelers’ decisions. Positive reviews increase trust, while negative feedback discourages bookings. Younger travelers rely more on eWOM than on traditional factors such as price or location (Roy, 2023).

Safety and security are tied to perceived behavioral control. When hotels provide visible safety measures, such as CCTV, restricted access, and hygiene protocols, travelers feel more in control of potential risks. This assurance increases their confidence to book budget accommodations, especially in the post-pandemic era (Li et al., 2022).

Overall, these four variables fit within the TPB framework. Price and location shape attitudes, eWOM reflects social influence, and safety increases perceived control. Together, they explain how traditional considerations (price, location) and newer priorities (eWOM, safety) influence booking intentions in the budget hotel sector.

Hypotheses Development

Based on the Theory of Planned Behavior (Ajzen, 1991) and supported by prior hospitality research, this study examines four key factors, price, location, electronic Word-of-Mouth (eWOM), and safety and security, in predicting travelers’ booking intentions for budget hotels.

H1: Price has a positive relationship with travelers’ booking intention for budget hotels.

H2: Location has a positive relationship with travelers’ booking intention for budget hotels.

H3: eWOM has a positive relationship with travelers’ booking intention for budget hotels.

H4: Safety and security have a positive relationship with travelers’ booking intention for budget hotels.

METHODOLOGY

This study employed a quantitative research design using a structured questionnaire to examine the factors influencing travelers’ booking intentions toward budget hotels in Melaka. The approach was chosen because it allows for testing hypotheses and identifying relationships between independent variables (price, location, eWOM, safety, and security) and the dependent variable (booking intention).

The study used a judgmental (purpose) sampling method, targeting travelers with experience or intention to stay in budget hotels. 150 valid responses were collected through physical distribution at tourist areas in Melaka and online surveys. While this method is practical for reaching the target population, it limits the generalizability of the findings to the wider traveler population. This limitation is acknowledged and discussed in the study.

The questionnaire was divided into three sections: demographic information, questions related to the independent variables (price, location, eWOM, and safety/security), and questions on booking intention. Items were adapted from established studies in hospitality and tourism research (e.g., Chan & Lam, 2013; Ahmad et al., 2018; Nisar et al., 2019), with slight modifications to suit the budget hotel context. Using prior validated instruments strengthened the reliability and relevance of the measures while keeping the questionnaire concise and focused. A five-point Likert scale was used, ranging from “strongly disagree” to “strongly agree.”

A pilot test was conducted with 30 respondents to assess the reliability of the questionnaire. Cronbach’s Alpha values for all constructs were above 0.9, indicating excellent internal consistency. However, very high values may also suggest redundancy in some areas. This point is noted in the discussion section to highlight the balance between reliability and measurement efficiency. Data was analyzed using SPSS software. Descriptive analysis was conducted to summarize respondents’ demographic profiles, followed by reliability tests to confirm internal consistency of the scales. Multiple regression analysis was then applied to examine the relationships between independent variables and booking intention, and to identify the most influential factor.

Although this study focuses on Melaka, the theoretical framework is relevant to other ASEAN destinations, particularly Indonesia. Future comparative studies could adopt a cross-country sampling approach to examine whether eWOM and safety are consistently stronger predictors of booking intention compared to traditional factors such as price and location. Such regional comparisons would enhance the generalizability of findings and contribute to a broader understanding of budget hotel consumer behavior in Southeast Asia.

FINDINGS/RESULTS

The survey gathered 150 valid responses. The sample was mostly female respondents (64.7%) and predominantly young travelers aged 18–24 (60.7%), many of whom were students. Most respondents traveled with family or friends and typically stayed for two to three nights, which reflects the typical pattern of budget hotel users in Melaka. This profile indicates that the findings largely represent younger, digitally active travelers who are cost-conscious but also influenced by peer validation.

Reliability Test

Table 7: Cronbach’s Alpha

The main survey results showed acceptable to excellent reliability across all variables. Cronbach’s Alpha values ranged from 0.704 (safety and security) to 0.909 (price). These results confirm that the measurement items used in this study were consistent and suitable for further analysis.

Regression Analysis

Table 8: Model Summary

A multiple regression analysis was carried out to examine the influence of price, location, electronic word-of-mouth (eWOM), and safety and security on travelers’ booking intentions toward budget hotels in Melaka. The overall model was statistically acceptable, explaining 32.6% of the variance in booking intention (Adjusted R² = 0.326). This indicates that while these four variables play a role in shaping booking decisions, other factors outside the scope of this study may also contribute to travelers’ choices.

Table 9: The Coefficient for Price, Location, eWOM, and Safety and Security

The results revealed that eWOM was the strongest and most significant predictor of booking intention (β = 0.326, p < 0.001). This finding suggests that travelers place high importance on online reviews and ratings when deciding whether to book a budget hotel. Positive reviews increase trust and reduce uncertainty, making eWOM a powerful driver of decision-making, especially among younger and digitally active respondents.

Safety and security also had a significant positive effect on booking intention (β = 0.188, p = 0.019). This highlights that travelers are more confident to proceed with bookings when they perceive hotels as safe and reliable. Measures such as security systems, hygiene protocols, and staff preparedness contribute to reducing perceived risks, especially in the post-pandemic era.

Price demonstrated only a borderline effect on booking intention (β = 0.163, p = 0.055). Although affordability remains relevant in the budget hotel segment, this result suggests that price alone is not sufficient to influence decisions unless supported by positive online credibility and visible safety measures. This finding reflects a shift in traveler behavior, where value-for-money is important but no longer the sole factor driving bookings.

By contrast, location was not found to be significant (β = 0.055, p > 0.05). This outcome indicates that in Melaka, a compact heritage city where attractions are clustered within short distances, location is less important compared to digital reputation and safety. Travelers in such destinations may not view accessibility as a major concern when making hotel choices.

In terms of hypotheses testing, the results provide partial support for the proposed relationships. H1, which predicted that price would positively influence booking intention, was only partially supported due to its weak effect. H2, which predicted that location would influence booking intention, was not supported, as location showed no significant relationship. H3, which predicted that eWOM would positively influence booking intention, was fully supported, confirming the dominant role of online reviews. Finally, H4, which predicted that safety and security would positively influence booking intention, was supported, as safety measures significantly influenced traveler decisions.

Overall, the regression analysis demonstrates that digital trust (eWOM) and risk management (safety/security) have overtaken traditional factors (price and location) as stronger predictors of booking intention in the budget hotel sector. These findings reflect a shift in traveler priorities, where online credibility and safety assurances matter more than affordability and geographical convenience.

DISCUSSION

The findings of this study provide important insights into the factors influencing travelers’ booking intentions toward budget hotels in Melaka. The results show that eWOM was the strongest predictor, followed by safety and security, while price had only a borderline effect, and location was not significant. These outcomes reflect the changing behavior of travelers in the post-pandemic era, where online credibility and safety assurance carry more weight than traditional considerations such as cost and accessibility.

The strong influence of eWOM is consistent with earlier studies, which argued that online reviews and ratings reduce uncertainty and enhance trust in low-cost accommodations (Masiero et al., 2020; Roy, 2023). This suggests that travelers, especially younger and digitally active ones, rely heavily on peer-generated content when choosing hotels. The dominance of eWOM in this study confirms that reputation management on digital platforms has become a critical competitive strategy for budget hotels in Malaysia.

The significant effect of safety and security also aligns with prior research which emphasized that travelers are unwilling to compromise on personal safety, even when opting for affordable hotels (Li et al., 2022; Roy, 2023). In the context of the COVID-19 recovery, visible safety measures such as hygiene protocols and secure facilities have become essential in shaping traveler confidence. This reinforces the idea that perceived safety is not just an operational requirement but also a marketing tool that directly influences demand.

The borderline effect of price partially supports earlier findings that affordability remains relevant in the budget segment (Mahdzar et al., 2021), but it also suggests that cost is no longer the sole determinant of booking intention. Travelers today appear willing to pay slightly higher prices if the hotel offers trustworthy online credibility and stronger safety assurances. This finding reflects a shift from purely cost-driven decision-making to value-driven decisions where price is balanced with quality and trust.

The finding that location was not significant contradicts much of the traditional literature that viewed accessibility as a critical success factor (Ahmad et al., 2018). A likely explanation is that Melaka, as a compact heritage destination, reduces the importance of location since most attractions are easily accessible. For young travelers, especially students, digital credibility and affordability outweigh geographical convenience. This result adds new context-specific evidence to the literature, showing that location may be less relevant in smaller destinations compared to larger urban cities.

Overall, these findings highlight a paradigm shift in budget hotel booking behavior. Traditional factors such as price and location, while still relevant, are no longer the strongest determinants. Instead, digital reputation (eWOM) and safety assurance have emerged as the most powerful predictors. This shift suggests that budget hotels must adapt their strategies to meet the expectations of modern travelers by focusing on online reputation management, transparent communication of safety measures, and competitive but value-oriented pricing.

These findings also reflect trends in Indonesia, where eWOM and safety assurance have been found to outweigh price and location in shaping booking decisions (Zahidah & Rostiani, 2021; Wardhani et al., 2021). Budget hotels in Bandung and Yogyakarta increasingly emphasize their CHSE-certified facilities in digital marketing to reassure travelers. This parallel suggests that Malaysia and Indonesia share converging consumer expectations, reinforcing the importance of digital trust and visible safety measures for budget hotels across both countries.

Future Research

For future research, it would be beneficial to conduct a larger-scale study that encompasses a more diverse sample of budget hotel travelers from various locations and demographics. This approach could enhance the external validity of the findings and provide a more comprehensive understanding of the factors influencing booking intention in the budget hotel industry. Additionally, a longitudinal study could be conducted to examine changes in booking intention and the factors influencing it over an extended period.

Moreover, qualitative research methods such as interviews or focus groups could be employed to gain deeper insights into travelers’ perceptions and experiences. Exploring other variables that were not included in this study, such as service quality or travelers’ satisfaction, could also provide a more comprehensive understanding of the factors influencing booking intention in the budget hotel industry. Overall, these future research directions would contribute to a more comprehensive understanding of travelers’ booking intentions and enhance the applicability and generalizability of the findings.

CONCLUSION

This study examined the influence of price, location, eWOM, and safety on travelers’ booking intentions toward budget hotels in Melaka. The results show that eWOM and safety are the strongest predictors, while price has only a minor effect and location is not significant. These findings highlight a post-pandemic shift where younger, digitally active travelers place greater emphasis on online credibility and safety assurances than on cost or convenience.

Although the focus is on Malaysia, the implications extend regionally. Indonesia’s budget hotel sector faces similar challenges, with travelers in cities such as Bandung and Yogyakarta also prioritizing peer-generated reviews and visible safety certifications. This alignment suggests that Malaysia and Indonesia must strengthen digital reputation and adopt transparent safety measures to build trust, satisfaction, and loyalty, ensuring the sustainable growth of the budget hospitality sector.

Theoretically, this study contributes by showing how digital trust and perceived safety now outweigh traditional factors in shaping booking behavior. Practically, budget hotels should: (i) encourage online reviews to enhance reputation, (ii) clearly communicate safety protocols, and (iii) implement competitive, value-driven pricing strategies.

Future studies should expand beyond Melaka, include more diverse demographics, and explore additional factors such as service quality and customer satisfaction to deepen understanding of budget hotel booking behavior.

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