Heritage Tourism at Niagara Falls

1. Introduction

Heritage tourism refers to “tourism centered on what we have inherited” from the past

(Aslam and Lee 2015; Ivanov, 2014; Yale 1991). Heritage tourism may be centered on travel

to experience nature (e.g. Niagara Falls, USA) or culture (e.g. Taj-Mahal, India). Many

businesses and industries such as hotels, restaurants, flourish under the umbrella of heritage

tourism. In this regard, suitably pricing hotel rooms and related services for heritage tourists

becomes a crucial issue (Chabra, 2015; Leo, Chris and Henning, 2010). This is because a

hotel’s price reflects an assessment of the value that heritage tourists see and their

willingness-to-pay for the hotel’s rooms and services (Adam and Francis, 2014, Jain 2014).

This paper addresses the following issues concerning the “price of heritage” with

respect to the hotel industry engaged in heritage tourism. The first issue concerns the pricing

strategies employed by hotels serving heritage tourists. In this paper, we investigate

whether the hotel industry charges heritage tourists a price premium? We evaluate

whether hotels extract a “price of heritage” by charging higher prices for hotel rooms in

heritage settings, compared to conventional hotel rooms?

2. Overview of the Study

Our field study concerns hotel prices at Niagara Falls, located at the American -

Canadian border in North America. The world-renowned Niagara Falls reflect nature at its

very best. They represent an icon of North America’s rich natural heritage

(http://niagarafallstourism.com/). The falls encompass breath-taking views from the

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Canadian side as well as the American side. In this study, we compare the prices of hotel

rooms at the Hilton Embassy Suites (http://www.embassysuitesniagara.com/). Strategically

located, this hotel offers heritage tourists hotel rooms with three possible views from the

room window – 1) A view of both Canadian and American Falls; 2) A view of the Canadian

Falls only; 3) No view of the falls. This setting provides us an excellent platform for

measuring the “price of heritage”. We empirically study how the view from the room

influences the room prices. Our regression analysis reveals that the Hilton hotel prices

rooms with otherwise practically identical interiors differently, depending on the heritage

view. Rooms with no view are the cheapest ($187); rooms offering the Canadian-side view

of the Niagara Falls only are relatively more expensive ($213), while rooms whose windows

display both the American and Canadian-side view of the Niagara Falls are comparatively

the most expensive ($238). Once again, our analysis of hotel room prices indicates a

significant “price of heritage” built into the room rent charged by the Hilton hotel.

3. An empirical field study of Hilton hotel prices at Niagara Falls, USA

3.1 Overview

The specific objective of this Study was to investigate the pricing strategy employed by

hotels located at heritage sites in a different locale. This study analyzed hotel prices at

Niagara Falls, USA. Our goal was to compare prices of hotels rooms with a view of the

Niagara Falls, with the prices of rooms without a view. The rationale behind this is

summarized next.

The Niagara Falls are a collective of three waterfalls, located on the Niagara River at

international border between Canada and the United States. The US Congress designated

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Niagara Falls as a National Heritage Place in 2008, for its natural beauty and esthetic

importance. (http://www.nps.gov/nifa/index.htm). It is one of the world’s most visited

tourist heritage places, with more than 22 million tourists per year (http://buffalorising.com).

In this Study, we compared the prices of hotel rooms with a ‘heritage view’ with the

prices of hotel rooms without a ‘heritage view’. Taking clues from hedonic pricing theory

(Rossen, 1974; Tomkovich and Dobie, 1995), we believe that consumers are asked to pay a

price-premium for the pleasure of watching a heritage view from the hotel room. If there is a

price of heritage, we expect that the hotel rooms with heritage views will be priced higher

than the hotel rooms without heritage views, after controlling for other factors. Accordingly,

we construct the following hypothesis:

Hypothesis H1: The average prices of hotel rooms at heritage sites with heritage

views are higher than the prices of comparable hotel rooms without heritage views.

3.2 Data

For this study, we collected data from the Hilton hotel website

(http://www3.hilton.com/en/hotels/ontario/hilton-niagara-falls-fallsview-hotel-and-suites/).

This hotel is situated near Niagara Falls, at the American-Canadian border. It overlooks the

Niagara Falls and provides breath-taking views of the scenic beauty of Niagara Falls. This

hotel has three types of rooms. Some rooms provide both American and Canadian views of

the Niagara Falls, some other rooms provide just the Canadian view of the Niagara Falls,

while the remaining rooms face the city and therefore do not provide any view of the falls.

We expected that a comparison of hotel rooms with different views from the windows,

would explain the extent to which hotels charge price premiums for heritage views.

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We focused on hotel rooms that had two queen-sized beds. This type of room was available

with three types of views from the window -- ‘City view’, ‘Canadian view’ and ‘American

and Canadian views’, as shown in Figure 3. Thus, the three types of rooms in this hotel were

increasing in their level of “heritage”. It is worth mentioning that the Hilton hotel also had

other rooms with king-sized beds and larger suites, which we ignored in order to restrict the

scope of our data collection.

<Insert Figure>

Seasonality: The pricing of hotels at a location like the Niagara Falls is expected to exhibit

strong seasonality. Hence, it made sense to collect a comprehensive dataset that reflected

the effects of seasonality. We collected data on July 15, 2014. We recorded the price of

reserving a room in advance, for future dates ranging from July 18, 2014 to Feb 27, 2015.

This duration was 224 days or 32 weeks. Hotel rooms at Niagara Falls are expected to be

more expensive during the peak season at Niagara Falls (July – October) compared to the

winter off-season (November – February). Therefore, analyzing prices over 32 weeks helped

us characterize the price of heritage, after controlling for price variations due to seasonality

and ruling out this alternate explanation for price dispersion. A hotel room is typically more

expensive during the weekend (e.g. Saturday) compared to the price of the same hotel room

during weekdays (e.g. Wednesday). Indeed, it is quite reasonable that hotels discriminate

between consumers based on whether they rent a room during the week or during the

weekend. In order to accurately measure the “price of heritage” with respect to the view of

the Niagara Falls, it was crucial to control for price variation driven by this factor.

Therefore, we recorded hotel room prices for rooms having the three types of views

described above, for every Wednesday and Saturday, during the July 18, 2014 to Feb 27,

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2015, timeframe, thereby generating 195 data points. We used a dummy variable

Weekend to indicate whether a posted price corresponded to a weekend Saturday

(Weekend=1) or a weekday Wednesday (Weekend=0) .

Heritage View: We used a dummy variable HeritageView to indicate whether a hotel room

offered a city view (HeritageView =0), or the room provided only a Canadian view of the

falls (HeritageView =1), or the room provided both American and Canadian views of the

Niagara Falls (HeritageView =2). In other words, we classified the views on three levels of

heritage. It was also possible that the price of heritage is higher during the weekend,

compared to a weekday. In order to research this possibility, we accounted for a possible

interaction between Weekend and Heritage .

Price: We used the variable Price to indicate the price of a hotel room. The prices ranged

from $135 to $575. The summary statistics for the hotel room prices, broken down by the

type of view on offer, are available in Table 3. As shown in Table 3 and Figure 3, the

average room prices were $187, $213 and $237 for each type of hotel view.

<Insert Table>

3.3 Model

In order to test Hypothesis 1, we proposed the following model:

Price=α 0 +α 1 HeritageView +α 2 Weekend + α 3 HeritageView∗Weekend +∈

(3)
We established the effect of heritage view on the price of a hotel room with the simplest

model. We regressed Price on HeritageView , Weekend and an interaction between

HeritageView and Weekend .We estimated model, using linear least squares. If there

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was a “price of heritage” in the market, we expected to find the coefficient of

HeritageView to be positive.

3.4 Results

We found empirical support for H1. The average room price of heritage view (American and

Canadian view) was higher than the prices of hotel room with Canadian view. Similarly

average price for the hotel room with Canadian view was higher than the price of hotel room

with City view. The regression analysis using Ordinary Least Squares yielded α 1 >0, with

p<0.05 as shown in Table 4. The average price of hotel room on weekend was also higher

than the price of hotel room on weekdays α 2 >0, with p<0.05.

<Insert Table>

4. Conclusion

This paper was motivated by the need for research that could improve our understanding of

how heritage tourism influences the pricing strategies in the hotel industry. The unique

contribution of this paper is that we investigated the price premium charged by hotels to

heritage tourists who travel to experience nature and/or culture. We found that tourists

visiting Niagara Falls pay a hefty “price of heritage”. We observed hotels in Niagara Falls

region charging price premiums for exposing tourists to natural heritage.

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5. References

Adam, Issahaku, and Francis Eric Amuquandoh. (2014). Hotel characteristics and location
decisions in Kumasi Metropolis, Ghana. Tourism Geographies Vol. 16, No. 4 pp 653
668.
Aslam, M. S. M., and Lee Jolliffe (2015). Repurposing colonial tea heritage through historic
lodging. Journal of Heritage Tourism ahead-of-print: 1-18.
Advisory Council on Historic Preservation 2014, Available from: <http://achp.gov/ [29 Jul
2014]
Buffalo Rising 2014, Available from: <http://buffalorising.com/>. [15 Jul 2014].
Chhabra, Deepak (2015). A cultural hospitality framework for heritage accommodations.
Journal of Heritage Tourism ahead-of-print 1-7.
Hilton hotels and resorts 2014, Available from:
<http://www3.hilton.com/en/hotels/ontario/hilton-niagara-falls-fallsview-hotel-
andsuites/index.html >. [14 Jul 2014].
National Heritage Areas USA 2014, Available from:
<http://en.wikipedia.org/wiki/National_Heritage_Area>. [29 Jul 2014].
National Park Services 2014, Available from: <http://www.nps.gov/nifa/index.htm>. [14 Jul
2014].
Niagra Falls One wonder after another 2014, Available from:
<http://niagarafallstourism.com/>. [28 Jul 2014].
Oberoi hotels and resorts The Oberoi Rajvilas Jaipur India 2014, Available from:
<http://www.oberoihotels.com/oberoi_rajvilas/> [28 Jul 2014].
Oberoi hotels and resorts The Oberoi Rajvilas Bangalore India 2014, Available from:
<http://www.oberoihotels.com/oberoi_bangalore/> [28 Jul 2014].
Rosen, S. (1974). Hedonic Prices and Implicit Markets: Product Differentiation in Pure
United Nations Educational Scientific and Cultural Organization 2014, Available from:
<http://whc.unesco.org/en/list/252>. [29 Jul 2014].
United Nations Educational Scientific and Cultural Organization 2014, Available from:
<http://whc.unesco.org/>. [29 Jul 2014].

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Table 1: Summary Statistics in the Niagara Falls Study

View from the Hotel Room Sample (N) Price in $

Mean (SD)
City View 65 $186.69 (73.84)
Canadian View 65 $213.15 (83.27)
Canadian and US View 65 $237.77 (49.50)

All Rooms 195 $212.54 (88.41)

Table 2: Regression Analysis in the Niagara Falls Study

β SE t-statistics

Intercept 164.531 13.359 12.316

Heritage View 22.656* 10.348 2.190

Weekend 44.2567* 18.748 2.361

Heritage View*Weekend 5.677 14.522 0.391

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Figure 1: Hilton Embassy Suites, Niagara Falls, USA Rooms with three types of views – 1)
Both Canadian and US Falls; 2) Canadian Falls only; 3) No view of the falls. (Source:
http://www.embassysuitesniagara.com/)

Average
View
Price

Canadian & US Falls $238

Canadian Falls only $213

No view of the falls $187

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