From Service Orientation to Strategic Operational Capability: Drivers for Hotel Competitiveness in China

Abstract

Against the backdrop of economic recovery and ongoing market restructuring, China’s hotel industry is undergoing a significant shift from being service-based to becoming strategy-driven and competitive. This study aims to identify the key factors driving hotel competitiveness utilizing a multidimensional quantitative perspective. Based on a structured questionnaire survey administered to hotel managers across provinces and cities in China, primary data was collected from a total of 727 valid responses. As such, exploratory factor analysis, comprising 31 ranked items, and multiple regression analysis were performed using SPSS, identifying four dimensions that significantly affect hotel competitiveness: namely, operational characteristics, service quality, customer satisfaction, and competitive performance. The results show that operational characteristics are the primary determinants of hotel competitiveness. Specifically, sustainable development strategy, digital technology adoption, product and service innovation, and pricing strategies were the most significant factors leading to competitive advantage. Unlike previous studies that emphasized service quality and customer satisfaction as the dominant drivers of competitiveness, this study finds that a hotel’s competitive advantage relies heavily on developing strategic operational innovation and resource allocation capabilities. This study’s novelty lies in its use of national empirical data to validate the multidimensional composition and inherent logical relationships for competitive advantage. It also proposes a multidimensional framework for analyzing hotel competitiveness, specifically designed for the developmental characteristics of China’s hotel industry, highlighting the need to transform from a service-oriented to a strategy-driven operational approach. The findings of this paper offer empirical evidence for hotel enterprises to refine management structures, foster innovation, and thereby develop strong capabilities for a sustainable competitive advantage.

1. Introduction

In the last five years, China’s hotel industry has experienced an extremely volatile recovery and reorganization. As domestic travel led the rebound, demand for accommodation recovered from 2023 onward (Yu & Gao, 2023; J. Xu, 2025). At the same time, the post-pandemic phase has accelerated market reorganization rather than a simple “return to normal”; China’s domestic tourism market has demonstrated strong resilience and endogenous growth momentum, which in turn has intensified competition among increasingly standardized hotel offerings (Ding, 2023; Zhang & Camargo, 2024).

China’s domestic tourism sector has recovered substantially in both volume and scale, with domestic tourism demand continuing to exceed international demand (Q. Xu et al., 2024). Recent official statistics indicate that in the first three quarters of 2025, domestic residents made 4.998 billion trips (+18.0% year-on-year) and spent 4.85 trillion yuan (+11.5% year-on-year) (Ministry of Culture and Tourism of the People’s Republic of China, 2025). These figures justify the continued strategic relevance of the hotel sector, although they do not, by themselves, explain why some hotels thrive while others struggle under the same macro tailwind.

The 2025 China Hotel Industry Development Report indicates that, as of 31 December 2024, China had 348,717 hotels, comprising a total of 17,643,235 guest rooms (CCTV, 2025). Meanwhile, chain penetration continues to rise, especially in mid- to high-end segments (Xinhua News Agency, 2024). Together, expanding supply and accelerating standardization reduce “easy” differentiation and push hotels toward more direct, capability-based competition.

Therefore, identifying the factors influencing the competitiveness of China’s hotel industry is crucial. Traditional research generally conceptualizes hotel competitiveness as a sequential process including high-quality service, enhanced customer satisfaction, customer loyalty, and repeat purchases, resulting in greater revenue and profits, which is the service–profit chain (Heskett & Schlesinger, 1994; Heskett et al., 2008). Accordingly, service quality and customer satisfaction are often treated as the primary, customer-facing drivers of competitive advantage in hospitality (Al-Ababneh, 2017; Ali et al., 2021; Van Nguyen & Ngoc, 2024). This stream provides a strong baseline, but it implicitly assumes that competitiveness is mainly experienced at the service interface.

Despite extensive prior research on hotel competitiveness, most studies adhere to the traditional service-oriented framework, framing service quality and customer satisfaction as the primary sources of competitive advantage (Heskett & Schlesinger, 1994). While this logic is insightful in explaining the customer experience-driven market, it leaves a growing theoretical tension underexplored in China’s current context: when supply expands and service becomes standardized, are hotels’ advantages still primarily driven by service interface improvements, or by deeper operational and strategic capabilities that sustain performance under price pressure? This study addresses this tension by shifting the focus from service orientation only to a multidimensional, capability-to-value pathway.

Authoritative analysis indicates that, following rapid expansion, China’s hotel industry is shifting from a growth market to a phase of stock-based competition, in which incremental demand is insufficient to absorb both new and existing supply (Cushman & Wakefield, 2025). In 2024, hotels in some areas experienced declining occupancy rates, pressure on average room rates, and a reduction in RevPAR (revenue per available room). This is particularly crucial in the midscale and upper-midscale categories, where competitive pricing, marketing initiatives, and rapid development into lower-tier markets escalate (China Business Journal, 2025). In such an environment, the central managerial problem moves beyond attracting customers to sustaining pricing power, profitability, and operational resilience under direct rivalry among homogeneous suppliers.

This demonstrates that the competitive logic of China’s hotel industry is in a transformation path. With the rapid expansion of market supply, intensified price competition, and shrinking profit margins, the focus of competition has shifted from simple service quality and customer satisfaction to deeper operational efficiency and strategic management capabilities (Gu, 2005; Z. Wang & Torres, 2024). In this study, we conceptualize Hotel Competitiveness (HC) as a hotel’s sustained ability to secure advantage in the market, and we capture its external manifestation through Competitive Performance (CP), a latent outcome combining customer acquisition capability and profitability ability. These capabilities encompass the establishment of premium pricing strategies, the preservation of appeal via innovation and product differentiation, and the conversion of sustainable operational attributes, such as cost control, resource allocation, energy efficiency, and longstanding brand reputation, into tangible profit margins (Peng & Zhang, 2020; Božič & Cvelbar, 2016; Grissemann et al., 2013).

In summary, the competitiveness of China’s hotel industry is now defined not merely by service quality but increasingly by a hotel’s comprehensive strategic operational capability and its ability to translate such capabilities into customer-perceived value and competitive performance in an overcrowded marketplace. This shift aligns closely with the assertion of the resource-based view, which states that a firm’s ability to maintain sustainable competitive advantage depends crucially on whether its internal resources and capabilities are scarce, difficult to imitate, and difficult to substitute and can be effectively organized and deployed based on their perceived importance (Barney, 1991). However, existing hotel research provides limited national-level evidence on which specific capability-related factors managers prioritize under stock-based competition, and how these priorities relate to service quality, customer satisfaction, and competitive performance. Therefore, it is necessary to reassess the elements of hotel competitiveness from a more comprehensive perspective, taking into account both the exterior indicators of consumer orientation and the strategic function of internal operational mechanisms. This study aims to identify the principal factors affecting hotel competitiveness through empirical analysis and to compare their perceived importance.

This study employs a theory-driven quantitative approach. A systematic literature review of prior studies on hotel competitiveness offers theoretical support. Furthermore, to obtain feedback relevant to the current market environment, we surveyed hotel managers across multiple provinces and cities in China and obtained 727 valid responses, enabling a national managerial perspective on competitiveness drivers.

The primary objective of this study is to comprehensively identify and analyze the critical factors affecting hotel competitiveness in China’s hotel industry as it transitions from incremental expansion to stock-based competition (China Tourism Hotel Association, 2024). To reduce ambiguity about competitiveness, this study focuses on a multidimensional driver set (operational characteristics, service quality, and customer satisfaction) and assesses how they relate to competitive performance as the observable outcome. The specific objectives of this study are as follows:

• Identifying key influencing factors: From the perspective of hotel managers, this study identifies key factors currently influencing hotel competitiveness and assesses their perceived importance within the industry, revealing managers’ prioritization of competitive advantage.
• Categorizing competitiveness factors through Exploratory Factor Analysis: An exploratory factor analysis (EFA) was performed on the collected survey data to uncover the fundamental dimensions of hotel competitiveness and explain the internal relationships among these factors, thereby establishing a basis for developing a systematic competitiveness framework.
• Analyzing the impact strength of each dimension through Multiple Regression Analysis: This study evaluates the degree to which each fundamental dimension elucidates competitiveness and finds the core drivers of competitive advantage.

The subsequent sections of this study are organized as follows: Section 2 systematically reviews theoretical and empirical research on hotel competitiveness, focusing on the progress and shortcomings of existing literature on key dimensions such as service quality, customer satisfaction, operational characteristics, profitability, and customer acquisition. Section 3 describes the research design, including questionnaire formulation, sampling methodologies, collection methods, and data analysis procedures. Section 4 presents the principal findings of exploratory factor analysis, mean ranking, and regression analysis, elucidating the fundamental determinants of hotel competitiveness. Section 5 discusses the research findings, compares them with existing research, and investigates their managerial implications within the framework of the Chinese hotel industry. Section 6 summarizes the research findings, clarifies limitations, and suggests future inquiry.

2. Literature Review

In business and economics research, competitiveness is widely defined as a multi-layered and multi-dimensional concept that reflects the ability of an enterprise, industry, or country to achieve sustainable development in a specific market environment by creating value more effectively than its competitors, expanding market share, and maintaining long-term profitability. This capability is manifested not only in economic performance but also reflects the overall competitive level of innovation, efficiency, adaptability, and sustainable development (Aigbe et al., 2024).

In a highly competitive, increasingly globalized service industry, the hotel industry’s internal competitiveness analysis is crucial to the survival and development of businesses. Establishing and maintaining core competitiveness in the hotel industry is an important objective for both scholars and practitioners, as it is an essential element of the global service industry. In the fiercely competitive market, hotels must deliver high-quality accommodation and dining services while also attracting and retaining customers through distinctive competitive advantages. Possessing competitive advantages is essential for enduring business growth (Nzisa et al., 2021). A comprehensive analysis of hotel competitiveness enables managers to recognize and measure their fundamental strengths while revealing potential market opportunities and challenges, thereby enhancing resource allocation and operational efficiency (Köseoglu et al., 2019). The proficient acquisition and application of competitive intelligence can markedly enhance hotel performance in financial and non-financial dimensions, especially in emerging markets, and is essential for formulating different competitive strategies (Alshammakh & Azmin, 2021). Given the development of the global economy and informatization, hotel companies must anticipate and adapt to national and international trends to develop forward-looking competitiveness strategies that ensure continued operations in this complex environment.

The hotel industry widely considers profitability and customer acquisition as the primary indicators of a company’s competitiveness. The two factors are interrelated; together, they jointly determine a hotel’s market position and potential for sustainable development. High profitability guarantees a hotel’s operational continuity and reinvestment capacity, while effective customer acquisition ensures a consistent customer base and facilitates market share expansion. In combination, they are the foundational elements of a hotel’s outstanding competitiveness (Pirogova et al., 2023; W. G. Kim et al., 2013). Profitability, often measured through indicators such as economic return, reflects the relationship between a company’s investment returns and results and is a common metric for measuring hotel operating performance (Lado-Sestayo & Vivel-Búa, 2019). Customer acquisition, conversely, emphasizes a hotel’s efficiency and effectiveness in attracting and retaining customers, which is directly associated with market share expansion and brand influence (Grissemann et al., 2013). This competence is demonstrated through the acquisition of new customers and the retention of existing ones by enhancing customer satisfaction and loyalty, thereby establishing a robust market foundation (Lado-Sestayo & Vivel-Búa, 2019). Companies adopt a customer-centric approach as their core business strategy, aiming to gain a competitive edge by delivering greater value than competitors and thereby enhancing organizational profitability (Aslam & Sahibzada, 2024). This perspective emphasizes the essential importance of customer acquisition and retention, as well as the attainment of financial returns through efficient operations, in the success of the hotel market (Grissemann et al., 2013). Numerous studies support this view, noting that a hotel’s resources and capabilities drive its sustainable competitive advantage, ultimately reflected in its market and financial performance (Božič & Cvelbar, 2016). This customer-focused strategy can significantly enhance market performance by continuously generating customer value and optimizing market performance (Tang, 2014). Existing research generally agrees that hotel competitiveness is ultimately reflected in the comprehensive performance of the market and finance, namely, competitive performance (Morgan et al., 2009; Sigalas et al., 2013). Building upon this, this study considers customer acquisition capability and profitability as essential components of competitive performance. Simultaneously, hotel organizations must constantly monitor external environmental changes, such as economic crises, as these macroeconomic shocks can profoundly affect a hotel’s operational performance and the effectiveness of its marketing strategies (Sampaio et al., 2025). Consequently, hotels must comprehensively analyze the determinants of competitiveness and attain sustainable development in an unpredictable environment by establishing adaptable business models and enhancing internal resource capabilities to navigate market fluctuations and maintain their core competitiveness (Božič & Cvelbar, 2016; Sainaghi et al., 2019b).

The definition and measurement of service quality have always been a core research topic in both academia and industry. The SERVQUAL model, proposed by Parasuraman et al. (1988), is widely considered one of the most influential theoretical frameworks in service quality research. This model defines service quality as the gap between customer expectations and perceptions and measures service quality across five dimensions: tangibility, reliability, responsiveness, assurance, and empathy. The impact of service quality on organizations is multidimensional. Service quality is an essential component of business success and a crucial accelerator of hotel competitiveness, business performance, and customer satisfaction in the tourism and hospitality industries. This is due to its direct correlation with repeat customer consumption and word-of-mouth communication, which substantially enhance the tourist experience and promote economic development (PJ et al., 2023; Van Nguyen & Ngoc, 2024).

High-quality service can enhance customer satisfaction, loyalty, and brand reputation, ultimately translating into higher profits. In the hotel industry, service quality is an essential element for achieving sustained competitive advantage and establishing customer confidence; hence, it provides substantial chances for hotels to distinguish themselves (Al-Ababneh, 2017). This differentiation is reflected not only in the unique design of service content but also in the professionalism and personalization demonstrated during service delivery, thereby shaping a hotel’s unique brand image and strengthening its market position (Crick & Spencer, 2011; Abukhalifeh & Som, 2014). In the post-pandemic period, the hotel industry encounters unprecedented challenges, making service quality a crucial determinant of success in the intensely competitive market (Oliveras-Villanueva et al., 2020; Ariffin et al., 2023). Research shows that a hotel’s ability to provide high-quality service is not just a matter of operational efficiency; it is a strategic necessity that directly impacts a hotel’s financial performance, guest satisfaction, and the building of lasting customer loyalty (Crick & Spencer, 2011; Al-Hyari et al., 2023).

High-quality service not only meets but also exceeds customer expectations, thereby establishing a long-term, mutually beneficial relationship between the hotel and the customer. The core of service management is to deliver services that surpass customer expectations, therefore establishing a substantial competitive advantage (Cahyani et al., 2024). This exceptional service quality acts as a bridge between hotels and their customers, fostering strong customer loyalty and eventually enhancing a hotel’s market competitiveness (Kumolu-Johnson, 2024). Specifically, consistent and responsive service, along with consistent service quality, are key factors for hotels to maintain their competitive advantage and enhance customer satisfaction in an increasingly competitive market. In competitive markets, particularly in the service industry, providing exceptional service quality is essential for distinguishing oneself from rivals, attracting and retaining customers (Kumolu-Johnson, 2024). Studies indicate that service quality is a fundamental determinant of customer satisfaction and markedly affects customer retention behavior (Villanueva et al., 2023). Perceived service quality is manifested not only in product consistency but also in the consistency of the service approach, guaranteeing adherence to service standards regardless of location (Mendocilla et al., 2021). This consistency in service standards is crucial for hotels to establish brand recognition and build customer confidence. This is particularly relevant in times when consumers extensively assess service quality via platforms such as Ctrip, where consistent, high-quality service has emerged as a crucial differentiator (Mondo et al., 2022).

Customer satisfaction is essential to a company’s enduring success and serves as the primary indicator of hotel service quality, acting as a basic predictor of operational success in the hotel industry (F. Chen et al., 2018; Song et al., 2022). This is evident in the positive influence of the customer experience on loyalty and repeat purchases, as well as in hotels’ strategic decision to enhance customer satisfaction to sustain competitive advantage (Y. J. Kim & Kim, 2022; Mill, 2002). Customer satisfaction is a critical metric of hotel performance, and a comprehensive understanding of the factors influencing customer satisfaction and discontent is essential for hotel management (J. Wang et al., 2021).

Intense competition in the hotel industry has driven hotels to seek differentiation, and guest satisfaction is one of the key indicators that distinguish good hotels from bad (Xiang et al., 2015). Consequently, hotel managers must thoroughly evaluate various aspects of service quality and determine their influence on customer satisfaction (Prabhakar & Gunasekeran, 2024). Customer satisfaction strongly influences customer loyalty; satisfied customers are more likely to become loyal customers (J. Chen & Liu, 2013). This loyalty includes not only recurrent purchases but also trust, emotional connection, and sustained preference for the brand. Customer loyalty can be measured by consistent repeat purchases, purchasing additional products or services, recommending a brand to others, and boycotting competing suppliers (H. Li et al., 2020). Customer satisfaction significantly influences trust; satisfied customers are more likely to trust a company, leading to enduring, loyal customer relationships (H. W. Kim et al., 2004; Anand & Bansal, 2016). Moreover, studies indicate that delighted customers are more willing to engage in word-of-mouth recommendations, including online evaluations, hence reducing marketing expenses (Harr, 2008; Crossman, 2024). Enterprises must continually enhance the quality of products and services to meet or exceed customer expectations, thereby augmenting customer satisfaction and ultimately promoting customer loyalty (Antikasari et al., 2021).

Sandoval (2019) noted that by identifying and meeting both explicit and implicit customer needs, hotels can continuously improve customer satisfaction, effectively build brand reputation, and promote word-of-mouth marketing, ultimately translating into tangible revenue growth. Customer loyalty is essential for enhancing hotel operating efficiency and maximizing profitability. As market competition intensifies, hotel managers increasingly realize that exclusive reliance on cost control and pricing strategies is inadequate for establishing a sustainable competitive advantage; they must instead redirect their strategic emphasis towards enhancing customer satisfaction and loyalty to optimize revenue (Lei et al., 2022). Emphasizing customer satisfaction enables hotels to achieve long-term profitability and establishes a robust, lasting competitive edge (Ing et al., 2019; Shi, 2020). Loyal customers, through repeat purchases and ongoing patronage, provide hotels with a consistent income stream and reliable cash flow, which are essential for financial planning and investment decisions (Inversini et al., 2020). Long-term customers are typically more willing to try new products and services offered by hotels, thereby establishing a market base for innovation and service growth, increasing profit potential. The cost of retaining loyal customers is considerably lower than that of acquiring new ones, allowing hotels to reduce marketing and operational costs while enhancing overall profitability (Majid et al., 2018). Therefore, hotels must prioritize customer loyalty within their strategic frameworks and build lasting customer trust and support by continuously improving service quality and the customer experience, thereby maintaining a competitive advantage in a fiercely competitive market.

In hotel competitiveness research, operational characteristics are not a single dimension but a comprehensive concept encompassing various internal management and operational practices. The current literature consistently indicates that the competitiveness of the hotel industry is profoundly influenced by several operational characteristics, which collectively determine a hotel’s market performance and position (Pérez Brito et al., 2023; Jokelainen et al., 2024). These characteristics span multiple levels, from macro-level marketing strategies to micro-level cost management and staff satisfaction, significantly influencing a hotel’s ability to attain and maintain a competitive edge amid intense market competition (Božič & Cvelbar, 2016). While these elements are often discussed independently in research, in actual hotel management, they interact and constrain one another, forming a crucial component of the overall hotel operational system. This study collectively designates these interrelated internal factors as operational characteristics. This categorization not only facilitates a macro-level understanding of hotel operational logic but also enables the incorporation of multidimensional variables into a unified analytical framework in empirical analysis, thereby more comprehensively revealing how operational differences influence the formation of hotel competitiveness.

While the literature generally agrees that a hotel’s resource structure and attributes are key to its competitiveness, a universally accepted generalized model has yet to emerge. Numerous studies are context-specific, emphasizing the influence of hotel characteristics and customer sociodemographic on competitiveness (Jokelainen et al., 2024). The resource-based view posits that distinctive resources and capabilities underpin hotels’ ability to establish competitive advantages (Tavitiyaman et al., 2011). Recent research also points out that core competencies in hotel management are an important mechanism for enhancing competitiveness (Marneros et al., 2021; Marneros et al., 2022). Location is an essential component of hotel strategic planning; hotels located near transportation hubs or tourist attractions are more likely to attract more customers (Yao, 2022; Liu & He, 2013). Moreover, hotel enterprises must thoroughly evaluate internal costs, market demand, the competitive environment, and customer behavior and adapt pricing strategies flexibly according to the current situation (Ademi & Avdullahi, 2021). Jokelainen et al. (2024) argue that effective cost control can directly improve a hotel’s profitability and market competitiveness by optimizing operational efficiency. Cheraghalizadeh and Dědková (2022) assert that marketing serves as a channel for enterprises to engage with customers and is an essential driver of competitiveness enhancement. An effective marketing strategy is critical for attracting customers, cultivating customer loyalty, and ultimately attaining profitable growth. It is directly associated with improving and solidifying a company’s market competitiveness (Sainaghi et al., 2019a). Kwun (2012) argues that a reputable brand name is a key asset for a company, providing both tangible and intangible competitive advantages in terms of performance. As products and services become increasingly similar and customer needs become increasingly diverse, differentiation has become a key element of corporate competition (Çetin et al., 2022; Seo et al., 2016).

Furthermore, research examining hotel culture suggests that corporate culture is the inherent driving force behind sustainable development. It encompasses the collective values, beliefs, codes of conduct, and practices within an organization and is crucial in determining employee behavior, influencing organizational performance, and building sustainable competitive advantage (Ghaleb, 2024; Gitling, 2020). Innovation, as a prelude to environmental management, can substantially influence hotel competitiveness, allowing them to better meet stakeholder demands for sustainability (López-Gamero et al., 2023). This forward-looking environmental management strategy not only enhances a hotel’s social responsibility image but also generates economic benefits and competitive advantages by optimizing resource efficiency and seizing emerging market opportunities (Kuo et al., 2022). This perspective suggests that by adeptly managing and integrating internal resources, hotels can develop core competencies that are difficult for competitors to imitate, therefore securing an advantageous market position (Maingi & Kamau, 2025). This strategic resource management extends beyond physical assets to include intangible assets such as high-quality customer service, improved operational processes, and a robust brand reputation, all of which can significantly enhance a hotel’s long-term competitiveness (Zaman et al., 2025).

Moreover, research indicates that, in evaluating hotel competitiveness, it is essential to account for industry-specific characteristics and their direct influence on business strategy (González-Rodríguez et al., 2018). China has been actively advancing its digital economy recently. In this context, the implementation of digital technologies, including IT systems and website development, optimizes customer experience and offers decision support via big data analysis, thereby significantly improving hotels’ market responsiveness and innovation capabilities, which further strengthens their competitive position (Hua, 2020; Arbelo et al., 2021; Sainaghi et al., 2019a). Consequently, a company’s strategic management should align with its business strategy to establish long-term goals, thoroughly evaluate internal and external environments, and make strategic decisions to attain competitive advantage and adapt to a dynamic external environment (C. Wang et al., 2021). Although relevant research has revealed the impact of operational characteristics on hotel performance from multiple perspectives, most literature tends to analyze from a single dimension and lacks a systematic exploration of operational elements. This study will further integrate these perspectives to construct a more explanatory framework for hotel competitiveness.

3. Methodology

3.1. Theoretical Framework and Hypotheses

This study’s theoretical framework integrates three complementary theoretical perspectives: the Resource-Based View (RBV), the Service-Dominant Logic (SDL), and Brand Equity Theory, to explain a capability-value-performance chain of hotel competitiveness in China’s stock-based market. First, the Resource-Based View (RBV) posits that a firm’s sustainable competitive advantage stems from its unique and difficult-to-imitate resources and capabilities (Barney, 1991). In the context of the hotel industry, these resources are reflected in strategic and operational capabilities such as cost control, innovation, digitalization, sustainability and employee-oriented human-resource management and internal market orientation, which together form the operational characteristics dimension (Božič & Cvelbar, 2016; Arbelo et al., 2021; Cuesta-Valiño et al., 2025). Second, the Service-Dominant Logic (SDL) emphasizes that firms and customers co-create value through interaction, providing a basis for understanding how service quality and customer satisfaction transform internal capabilities into customer-perceived value (Vargo & Lusch, 2004). Ultimately, Brand Equity Theory posits that customer-perceived quality, value, and satisfaction are pivotal pathways to fostering brand loyalty and market competitiveness (Aaker, 1991; Keller, 1993; Morgan et al., 2009). Taken together, these perspectives collectively suggest how internal competencies, customer perceptions and external competitive performance are interconnected.

Within this framework, we conceptualize hotel competitiveness (HC) as a hotel’s sustained ability to secure advantage in its target market. Because such ability is not directly observable, we operationalize it through competitive performance (CP), defined as the hotel’s combined market and financial performance and measured by items on customer acquisition capability and profitability (Morgan et al., 2009; Sigalas et al., 2013). Operational characteristics (OC) denote bundles of internal strategic and operational capabilities, including cost control, pricing and revenue management, marketing and brand management, innovation, digitalization, sustainability, and human resource practices (Božič & Cvelbar, 2016; Arbelo et al., 2021). Service quality (SQ) is defined as customers’ overall evaluation of service performance along dimensions such as tangibility, reliability, responsiveness, assurance, and empathy (Parasuraman et al., 1988; Cronin & Taylor, 1992). Customer satisfaction (CS) reflects customers’ affective and cognitive evaluation of whether the hotel experience meets or exceeds expectations (Anderson & Fornell, 1994; Y. J. Kim & Kim, 2022). These construct definitions are consistent with the literature reviewed in Section 2 and were used to guide the development of the 31 questionnaire items and the subsequent empirical model.

Drawing on RBV, SDL, and Brand Equity Theory, we therefore treat OC, SQ, and CS as three complementary driver dimensions that shape CP. RBV implies that stronger operational characteristics should directly enhance a hotel’s ability to generate superior market and financial results (Božič & Cvelbar, 2016). SDL and the service–profit chain literature suggest that higher service quality and customer satisfaction lead to repurchase, positive word-of-mouth, and revenue growth (Heskett & Schlesinger, 1994; Cronin & Taylor, 1992). Brand Equity Theory further indicates that customers’ positive evaluations accumulate into brand equity, which strengthens market preference and performance (Aaker, 1991; Keller, 1993). Accordingly, and in line with our research questions, we formulate three testable hypotheses, which are examined using the regression model reported in Section 4:

H1. 

Operational characteristics (OC) have a positive effect on competitive performance (CP).

H2. 

Service quality (SQ) has a positive effect on competitive performance (CP).

H3. 

Customer satisfaction (CS) has a positive effect on competitive performance (CP).

3.2. Research Design

This study adopts a theory-driven quantitative research design to validate the multidimensional mechanisms underlying hotel competitiveness empirically. Against the backdrop of China’s continued economic recovery and the hotel industry’s accelerated digitalization and sustainable transformation, this study focuses on identifying and quantifying the core factors influencing hotel competitiveness

Based on these research objectives, the following three research questions are posed:

• RQ1: From the perspective of hotel managers, in the current context of China’s economic recovery and hotel industry transformation and upgrading, which factors are considered key to influencing hotel competitiveness?
• RQ2: Can these influencing factors be grouped into several latent dimensions through exploratory factor analysis (EFA), thereby revealing the underlying structure of hotel competitiveness?
• RQ3: How strong is the impact of each latent dimension on the overall competitiveness of hotels? Which of these dimensions plays a core role in building a hotel’s competitive advantage?

To answer these research questions, the authors systematically reviewed relevant domestic and international literature and designed a quantitative questionnaire based on the current context of the Chinese hotel industry. The questionnaire contains 16 demographic and background questions and 31 questions related to hotel competitiveness. The study employed a Likert scale.

3.3. Sampling Process and Data Collection

The subjects for this study were management personnel at various levels working in mid- to high-end hotels in China. Purposive sampling combined with snowball sampling was used to obtain the sample. Specifically, managers from representative city hotels were contacted to complete an online questionnaire. Subsequently, with their consent, they were asked to recommend peer managers to complete the questionnaire. This method gradually expanded the sample to include hotel managers from different regions and brands, resulting in 896 participants completing the online questionnaire. During the data cleaning phase, we eliminated the following types of samples: questionnaires whose positions did not meet hotel management standards, questionnaires with incomplete responses, and questionnaires with unusual response patterns. Ultimately, 727 valid questionnaires were collected, representing an 81.1% validity rate, and the final sample thus reflects the perceptions of managers in mid- to high-end hotels accessible through professional networks, rather than a statistically random sample of all hotels. As a result, the findings should be interpreted as managerial perceptions from this segment of the industry, not as a fully representative picture of all hotel categories in China.

3.4. Data Analysis

All data analyses were conducted using SPSS Statistics 26.0. The data analysis process consisted of three main steps. First, to ensure the scale’s internal consistency and measurement reliability, reliability and validity tests were conducted. Second, an exploratory factor analysis (EFA) was performed to examine whether the 31 theory-driven items empirically converged into the expected latent dimensions and to verify the questionnaire’s dimensionality. Furthermore, to examine the impact of each potential dimension on competitive performance (CP) as the observable outcome of hotel competitiveness, a multiple regression model was constructed with CP as the dependent variable. In addition, we examined multicollinearity by inspecting variance inflation factors (VIFs) for all predictors and assessed potential common method variance using Harman’s single-factor test. As part of a broader research project using the same data set, we also estimated more comprehensive CFA/SEM models that include the four focal constructs analyzed in this paper; these extended models showed good overall fit and yielded structural relationships consistent with the regression results reported here, so the detailed estimates are not reported for reasons of parsimony.

4. Results

The questionnaire for this study initially included 16 questions on respondents’ demographic characteristics and industry knowledge, providing a comprehensive picture of the sample and research context. Given that this article focuses on the core factors influencing hotel competitiveness, to maintain analytical simplicity and focus, only key background variables directly relevant to the research topic are reported in

Table 1. Demographic information of the respondents (Source: Authors own work).

Characteristic	Group	Frequency	Percent
Gender	Male	372	51.17
	Female	355	48.83
	Total	727	100.00
Age	26~35	263	36.18
	36~45	265	36.45
	46~55	137	18.84
	Over 56	62	8.53
	Total	727	100.00
Educational Background	High School Graduate or below	6	0.83
	Associate degree/Vocational School (2–3 years Diploma)	221	30.40
	College/University (4 years bachelor’s degree)	317	43.60
	Graduate Degree—master’s degree	121	16.64
	Doctorate Degree—PhD	62	8.53
	Total	727	100.00
Years of Work Experience	Less than 5	170	23.38
	5–10	242	33.29
	11–15	183	25.17
	16–20	70	9.63
	More than 20	62	8.53
	Total	727	100.00
Hotel Classification	5-star hotel	293	40.30
	4-star hotel	355	48.83
	3-star hotel	79	10.87
	Total	727	100.00
Working Department	Food and Beverage Department	131	18.02
	Front Desk Department	105	14.44
	Housekeeping Department	136	18.71
	Marketing and Sales Department	114	15.68
	Financial Department	125	17.19
	Human Resource Department	110	15.13
	Upper Management—Top Administration Department	6	0.83
	Total	727	100.00
Managerial Level	Entry Level—Supervisory/Team Leader	347	47.73
	Mid-Level—Department Manager/Assistant Manager	200	27.51
	Senior Manager (e.g., director, deputy general manager)	122	16.78
	General Manager	47	6.46
	Upper Level—Top Administrator (e.g., Group VP, Executive Board)	11	1.51
	Total	727	100.00

, including gender, age, education level, years of experience, hotel grade, department, and management level. These variables accurately represent the sample’s characteristics and serve as essential controls and an explanatory framework for the subsequent empirical analysis.

This study collected 727 valid completed questionnaires. Males accounted for 51.17% of the sample, while females accounted for 48.83%, representing a relatively balanced gender ratio. In terms of age distribution, the 26–35 and 36–45 age groups were similar, accounting for 36.18% and 36.45%, respectively, indicating that the respondents were primarily young and middle-aged professionals. In terms of educational background, the majority of respondents held a bachelor’s degree or higher, with bachelor’s degrees accounting for the highest proportion at 43.60%, followed by graduates from junior colleges or vocational schools at 30.40%. Respondents held a master’s degree at 16.64% and a doctorate at 8.53%. This distribution indicates a high level of education among the sample. In terms of years of work experience, the largest proportion, 33.29%, had 5–10 years, followed by 11–15 years (25.17%) and less than 5 years (23.38%), indicating that most respondents have extensive industry experience. In the hotel classification, four-star hotel employees accounted for the highest proportion (48.83%), while five-star hotel employees accounted for 40.30%, indicating that the sample primarily came from mid- to high-end hotels. Departmental distribution was relatively balanced, with the highest proportions coming from the Housekeeping Department (18.71%) and the Food and Beverage Department (18.02%), while all other departments were also represented, demonstrating broad participation from key hotel functions. Regarding management levels, frontline supervisors or team leaders accounted for 47.73%, while middle-level managers accounted for 27.51%. This distribution indicates that the sample primarily consisted of middle- and frontline managers, with a significant proportion of senior management, providing a multi-level perspective for the study. Overall, this study’s sample structure was well-structured, encompassing diverse genders, age groups, education levels, hotel grades, and management levels, providing strong representativeness and a reliable foundation for subsequent empirical analysis.

To verify the internal consistency of each latent variable, reliability tests were conducted. As shown in

Table 2. Reliability Statistics (Source: Authors own work).

Factor Items	Cronbach’s Alpha
Operational Characteristics	0.946
Service Quality	0.903
Customer Satisfaction	0.908
Competitive Performance (Customer Acquisition and Profitability Ability)	0.899

, the Cronbach’s α values for the four dimensions were all significantly above the generally accepted threshold of 0.70 (Nunnally & Bernstein, 1978), at 0.946, 0.903, 0.908, and 0.899, respectively, indicating that the scale has extremely high internal consistency and reliability. Overall, the reliability indicators for each variable met rigorous standards for social science research, demonstrating that the questionnaire design and measurement results are sound and reliable, laying a solid foundation for subsequent analysis. In the exploratory factor analysis phase, customer acquisition capability and profitability showed a high correlation and converged to the same factor. Based on this, this study merged the two into a unified construct, “competitive performance,” and conducted a reliability test accordingly.

Before performing factor analysis, the suitability of the data for the 31 measurement items was tested. As shown in

Table 3. KMO and Bartlett’s Test (Source: Authors own work).

Kaiser-Meyer-Olkin Measure of Sampling Adequacy	0.966
Bartlett’s Test of Sphericity	Approx. Chi-Square	14,132.805
	df	465
	Sig.	0.000

, the KMO was 0.966, significantly exceeding the excellent standard of 0.90 (Kaiser, 1974), indicating that the sample data were well suited for factor analysis. Bartlett’s test of sphericity was significant (χ² = 14,132.805, df = 465, p < 0.001), indicating that the correlation matrix between the variables was not the identity matrix and that the data were well suited for factor analysis. To further examine potential common method variance, a single-factor unrotated exploratory factor analysis (Harman’s one-factor test) was conducted on all 31 items; the first factor accounted for 38.8% of the total variance, which is below the commonly used 50% threshold, suggesting that no single general factor dominates the responses.

Table 4. Rotated Component Matrix (Source: Authors own work).

	Component
	1	2	3	4
OC1	0.770
OC2	0.770
OC3	0.773
OC4	0.757
OC5	0.774
OC6	0.776
OC7	0.762
OC8	0.760
OC9	0.776
OC10	0.745
OC11	0.759
SQ1				0.759
SQ2				0.765
SQ3				0.761
SQ4				0.761
SQ5				0.776
SQ6				0.768
CS1			0.768
CS2			0.775
CS3			0.769
CS4			0.782
CS5			0.779
CS6			0.766
CAC1		0.740
CAC2		0.714
CAC3		0.755
CAC4		0.686
PROF1		0.696
PROF2		0.738
PROF3		0.690
PROF4		0.710

Note. Item codes (e.g., OC1–OC11, SQ1–SQ6, CS1–CS6, CAC1–CAC4, PROF1-PROF4) correspond to the full questionnaire items listed in Table 5, which is presented later in this section.

presents the factor loading results after Varimax rotation. The results show that all items exhibit high loadings on their respective latent factors (all above 0.68), indicating good convergent and discriminant validity. The overall structure between items is clear, with no significant cross-loadings. This means that the dimensions are independent and statistically sound. Based on Table 4, OC1 to OC11 represent operational characteristics such as hotel location, pricing strategy, marketing strategy, innovation, sustainability, and digital technology adoption; CAC1 to CAC4 represent customer acquisition, and PROF1 to PROF4 represent profitability; CS1 to CS6 represent customer satisfaction factors like perceived value and customer loyalty; SQ1 to SQ6 represent service quality aspects, including service consistency and responsiveness. Overall, after rotation, all items were accurately loaded onto the expected dimensions, verifying the scale’s rationality. Because the 31 items were developed from established literature and expert consultation, this EFA primarily serves to confirm that they cluster into the four theorized dimensions in the Chinese hotel context rather than to discover entirely new constructs. The loading values of each item on its factor were significantly higher than those of other factors, further demonstrating good discriminant and convergent validity between the variables, and the structural stability of the scale was empirically supported.

Table 5. Factor (varimax rotation with Kaiser normalization) and descriptive analysis for the competitiveness variables (Source: Authors own work).

Factor Analysis					Descriptive Analysis—Importance
Factor Items	Loading	Eigenvalues (Rotate Eigenvalues)	Percentage of Explained Variance (Rotate Percentage)	Reliability (Cronbach’s α)	Mean	Std. Dev	Rank of 31	Overall Rank
Factor 1: Operational Characteristics		7.098	22.898	0.946	3.473	0.928		1
The hotel can effectively control operating costs while maintaining high-quality service	0.770				3.436	1.147	14
The hotel adopts a reasonable and attractive price positioning	0.770				3.494	1.156	4
The hotel has a clear and precise target market positioning and effective marketing activities	0.773				3.490	1.158	5
The hotel is located in a central business district and is easily accessible by public transportation and major roads.	0.757				3.469	1.141	6
The hotel has a precise brand positioning and a good brand image, and has established a positive corporate culture and core values, which are effectively implemented in daily management and customer service	0.774				3.444	1.171	11
The hotel can continuously innovate products and services to maintain its attractiveness	0.776				3.503	1.122	3
The hotel actively adopts new technologies to improve operational efficiency and customer experience	0.762				3.512	1.149	2
The hotel can provide products and services that are significantly different from its competitors	0.760				3.429	1.150	17
The hotel actively integrates sustainability practices (e.g., energy-saving, waste reduction, environmental initiatives) into its daily operations and long-term management strategy.	0.776				3.517	1.180	1
The hotel provides a supportive work environment where employees generally experience high job satisfaction.	0.745				3.455	1.130	7
The hotel management can make forward-looking strategic decisions based on the prediction of market trends and future development	0.759				3.455	1.151	8
Factor 2: Competitive Performance		4.787	15.443	0.899	3.179	0.928		4
The hotel’s high brand recognition in its target market helps it continuously attract potential customers.	0.740				3.208	1.193	25
The hotel’s marketing strategy effectively reaches and converts its target customer base.	0.714				3.166	1.211	28
The hotel effectively utilizes multiple channels (e.g., social media, online travel agencies, and its official website) to promote and attract customers.	0.755				3.147	1.211	30
The hotel actively maintains a positive online reputation, effectively attracting new customers.	0.686				3.172	1.238	27
The hotel’s pricing capability enables it to achieve strong revenue performance while remaining competitive in the market.	0.696				3.206	1.201	26
The hotel’s food & beverage and ancillary services make a significant contribution to overall profitability.	0.738				3.146	1.222	31
The hotel maintains stable and above-average operating profit performance in the local industry, thereby strengthening its overall competitiveness.	0.690				3.211	1.238	24
The hotel’s sustained profitability provides sufficient funds for reinvestment (e.g., facility upgrades and marketing innovation), thereby maintaining a long-term competitive advantage.	0.710				3.157	1.192	29
Factor 3: Customer Satisfaction		4.115	13.273	0.908	3.381	0.950		3
Customers have high expectations for the hotel’s products and services	0.768				3.366	1.169	22
The hotel’s actual products and services can meet or even exceed customers’ expectations	0.775				3.392	1.157	19
Customers generally believe that the hotel’s price-performance ratio is satisfactory	0.769				3.340	1.129	23
Customers are satisfied with the hotel’s overall experience, and the repeat occupancy rate remains at a high level.	0.782				3.391	1.165	20
Customers are willing to actively provide feedback to the hotel if they have any opinions or suggestions on the hotel	0.779				3.410	1.128	18
Customers are willing to actively recommend the hotel to others	0.766				3.387	1.136	21
Factor 4: Service Quality		4.039	13.029	0.903	3.443	0.935		2
The overall environment and facilities of the hotel are complete and high-quality (such as building appearance, surrounding environment, guest rooms, restaurants, entertainment facilities, supporting facilities, public areas, etc.)	0.759				3.454	1.143	9
The hotel’s products and services are consistent and reliable	0.765				3.443	1.141	12
The hotel’s service response speed is fast and can meet customer needs promptly	0.761				3.448	1.145	10
The hotel can properly resolve customer problems and complaints	0.761				3.435	1.116	15
The hotel strictly implements safety regulations, including fire protection, sanitation, and food safety, to ensure the personal and property safety of its customers and create an environment that makes them feel at ease.	0.776				3.431	1.157	16
The hotel understands and pays attention to the distinctive needs of its customers, striving to provide a personalized service experience that ensures customers feel valued and cared for.	0.768				3.443	1.136	13
Total Variance Explained			64.643

presents the results of the exploratory factor analysis and descriptive statistics. The cumulative variance explained by the four factors reached 64.64%, indicating that the scale has high structural representativeness. Factor analysis indicates that Customer Acquisition Capability (CAC) and Profitability (PROF) converge into a latent factor representing the hotel’s overall market and financial performance. Therefore, this factor is referred to as Competitive Performance in this study, serving as an outcome dimension of the hotel’s competitiveness. Based on the ranking result, respondents generally believed that operational characteristics received the highest perceived importance scores among the four dimensions, followed by service quality, customer satisfaction, and competitive performance.

Table 6. Regression Analysis of Service Quality, Customer Satisfaction, and Operational Characteristics on Competitiveness Performance (Source: Authors own work).

DV	IV	Unstandardized Coefficients		Standardized Coefficients	t	Sig.	R2	Adjusted R2	F
		B	SE	Beta
CP	OC	0.23	0.04	0.23	6.36	0.000	0.35	0.34	127.22
	SQ	0.23	0.04	0.24	6.65	0.000
	CS	0.28	0.03	0.28	8.12	0.000

Note. Item codes (CP: Competitive Performance; OC: Operational Characteristics; SQ: Service Quality; CS: Customer Satisfaction).

presents the results of a multiple regression analysis of the impact of operational characteristics, service quality, and customer satisfaction on competitive performance (CP) as the observable outcome of hotel competitiveness. The model is statistically significant overall (F = 127.22, p < 0.001), with a coefficient of determination R² of 0.35 and an adjusted R² of 0.34, indicating that the three independent variables collectively explain approximately 34% of the variance in CP. This level of explained variance is moderate but typical for cross-sectional survey studies in management, implying that additional unobserved factors beyond the three driver dimensions also contribute to hotel competitiveness. The results indicate that all three independent variables have a significant positive impact on hotel competitiveness (p < 0.001). Among them, customer satisfaction has the highest standardized regression coefficient (β = 0.28, t = 8.12), followed by service quality and operational characteristics. Variance inflation factor (VIF) values for the three predictors ranged between 1.33 and 1.40, with tolerance values above 0.71, indicating no serious multicollinearity in the regression model.

However, the ranking analysis of 31 specific competitiveness-related factors shows that the top eight most influential factors all belong to the operational characteristics dimension. This result suggests that although customer satisfaction and service quality are crucial to hotel competitiveness, managers in this sample associate the perceived sustainability of competitive advantage closely with internal operational efficiency and strategic management capabilities. In other words, operational characteristics appear to function as the core supporting element connecting service quality and customer satisfaction, providing hotels with a stable competitive foundation in the eyes of respondents, and are considered highly influential for long-term competition.

5. Discussion

This study aims to explore the key drivers of hotel competitiveness in China against the backdrop of the current rapid economic recovery. Based on empirical data from 727 hotel managers across various provinces and cities in China, the findings reflect national-level managerial perceptions rather than objective performance data, and they reveals the significant impact of operational characteristics, service quality, and customer satisfaction on competitive performance (CP) as the observable outcome of hotel competitiveness through exploratory factor analysis and regression analysis. Furthermore, the empirical results support a multidimensional competitiveness framework in which these three internal dimensions jointly enhance perceived competitiveness, ultimately manifested through competitive performance.

The results of the exploratory factor analysis indicate that operational characteristics possess the highest explanatory power overall, indicating their fundamental role in the concept of hotel competitiveness. This finding suggests that hotel managers primarily understand “competitiveness” as an issue of internal capabilities and system efficiency. In our data, respondents systematically assign higher importance scores to operational characteristics than to service quality, customer satisfaction, or competitive performance, implying that, to remain competitive, a hotel must first have robust and sustainable internal operating drivers. In other words, operational characteristics are structurally considered the foundation of competitive advantage (Bilgihan et al., 2010; Shin & Jeong, 2022), even though, as the regression results show, their direct effect on CP is somewhat weaker than that of customer satisfaction. This tension between perceived importance and statistical impact is one of the key empirical insights of the study.

The above findings align with existing research in the field of hotel management. Multiple studies have demonstrated that a hotel’s operational framework, encompassing process standardization, cost management, information technology proficiency, sustainable development strategies, marketing competence, brand management, corporate culture, strategic oversight, and innovation capacity, directly influences its long-term viability in a fiercely competitive market (Manoharan & Singal, 2019). Strategic management enables hotels to adapt their resources to shifting marketplace trends (López-Gamero et al., 2023; Maingi & Kamau, 2025; Tajeddini et al., 2024). Information technology and digitalization help reduce operational expenses, enhancing service productivity, and adapting to the COVID-19 disruptions (Choi et al., 2023; Marneros et al., 2024; Y. Li et al., 2025). However, despite the enormous potential of information technology in enhancing hotel competitiveness, it still faces challenges in practical application, particularly in fully leveraging advanced technologies such as AI to improve customer experience and operational efficiency, where a theoretical and practical gap remains (Abufawr et al., 2024). Pricing, location, innovation and differentiation have all been linked to superior performance and competitiveness (Abrate et al., 2012; Marco-Lajara et al., 2014; Campo et al., 2014; González-Rodríguez et al., 2018), and dynamic marketing, branding and corporate culture further support financial stability and competitive outcomes (Hariandja & Aurelia, 2025; Fan et al., 2023; Phung & Nguyen, 2025). Our contribution is to show, with national-level managerial data from China, that these diverse operational levers are not perceived in isolation but collectively form a single latent “operational characteristics” dimension which managers view as the backbone of competitiveness, thereby empirically grounding the resource-based view in this specific context.

Additionally, studies from an employee perspective have confirmed a significant correlation between employee attitudes and operational performance and profitability (Yee et al., 2011). Aboelmaged (2018) asserts that environmental orientation and ecological innovation can enhance hotel performance. These employee and sustainability-related factors are consistent with the operational characteristic items in our factor model, and are jointly classified as operational characteristics in this study. Thus, operational characteristics are the fundamental driving force behind a hotel’s daily operations and the foundation for sustaining a competitive advantage in a complex and dynamic market environment (Arbelo et al., 2021).

Service quality ranks second in importance. This ranking logically illustrates that, from the perspective of hotel managers, service quality serves as the bridge linking internal operational capabilities to customer satisfaction rather than as a fundamental resource in its own right. Traditional research on hotel service quality relies on the SERVQUAL framework, emphasizing perceptible touchpoints such as reliability, responsiveness, empathy, assurance, and tangibles (Parasuraman et al., 1988; Cronin & Taylor, 1992). Subsequent studies have consistently validated the essential role of service quality in influencing hotel competitiveness (Sukwadi et al., 2012; Baquero, 2023; Nayna et al., 2020; Ariffin et al., 2023; Ogungbayi et al., 2019). Our findings complement this stream by showing that, although managers rate service quality as the second most important dimension overall, its direct statistical impact on CP is weaker than that of customer satisfaction. In other words, service quality is perceived as a necessary conduit through which operational capabilities are experienced by customers, but it is customers’ overall satisfaction that ultimately drives competitive performance in our data.

Customer satisfaction is ranked third. From a conceptual perspective, satisfaction is more akin to a market outcome than a company’s capability or investment. This aligns with the classic service–profit chain logic in which higher quality service leads to higher satisfaction, which in turn enhances loyalty and performance (Cronin & Taylor, 1992; Anderson & Fornell, 1994; Gontur et al., 2022; Marcos & Coelho, 2022). In our sample, managers therefore position satisfaction behind operational characteristics and service quality when asked to prioritize competitiveness dimensions, yet the regression analysis shows that customer satisfaction has the strongest direct effect on CP. In other words, satisfaction serves as a performance-proximate outcome; it enhances the value generated by operations and services, thereby turning it into market performance indicators such as repeat purchases and positive word-of-mouth. It is this aggregated evaluation that most powerfully predicts competitive performance in our data. This divergence between perceived structural importance (ranked third) and functional influence (highest beta) provides a nuanced insight beyond the existing literature.

Ranking fourth in competitive performance does not imply lower importance; rather, it reflects the current state of transformation in China’s hotel industry. When managers are asked to prioritize drivers of competitiveness, they tend to emphasize internal levers (OC, SQ, CS) over outcome variables such as CP. In China’s current industry environment, competition mainly relies on internal operational efficiency and the ability to withstand price pressure, even though profitability and customer acquisition abilities remain the paramount external outcomes. This ranking suggests that China’s hotel industry is in a transitional phase, converting operational and service advantages into sustainable profitability and market competitiveness. This transformation requires more mature strategic management capabilities, sustainable operations, and a long-term development perspective (Turner et al., 2017; 36Kr Europe, 2025).

It is noteworthy that in further regression analysis, customer satisfaction had the highest standardized regression coefficient, followed by service quality and operational characteristics. This outcome indicates that although consumer satisfaction is not the primary potential dimension within the competitive framework, it is the strongest statistical predictor of CP in our model. Operational characteristics and service quality serve as internal drivers of competitiveness; however, customer satisfaction is the primary output variable that links internal capabilities to external performance. This logic is consistent with the service-driven logic and resource-based view theory, namely, that a company’s core competitiveness is ultimately realized through customer-perceived value (Barney, 1991; Solakis et al., 2022; Mohd Akhir et al., 2023; Ikechi & Tamuno, 2023).

In summary, the factor structure, the importance rankings, and the regression results point to a hierarchical path to competitiveness, which includes internal operational efficiency, improved service quality, increased customer satisfaction, strengthened market competitiveness, and finally, enhanced competitive performance. This outcome suggests that while operational characteristics are crucial for conceptualizing competitiveness, their influence on CP is likely to be channeled through perceived service quality and customer satisfaction rather than exerted in isolation. This disparity highlights the varying dimensions of structural importance and functional influence, while also underscoring the dynamic and multi-phase nature of competitiveness formation. At the same time, it is important to note that our empirical model tests only the direct effects of OC, SQ and CS on CP; the full hierarchical mechanism remains a conceptual interpretation that future research should examine using longitudinal and mediation-based designs.

6. Conclusions

With the recent economic recovery, following the pandemic, the competitive landscape of China’s hotel industry is undergoing a phased evolution from a single service-oriented approach to a comprehensive strategic approach. In this context, the study develops and evaluates a multi-dimensional competitiveness framework that includes operational characteristics, service quality, and customer satisfaction. The study suggests that operational characteristics play a significant role in the conceptual framework of competitiveness, while competitive performance is the ultimate manifestation of competitiveness. Taken together, the factor structure, importance rankings and regression results point to a hierarchical mechanism in which internal operational efficiency and service quality are transformed into external market competitiveness through customer satisfaction. A company’s sustainable competitive advantage arises from the effective transformation of its internal resources and capabilities into perceived customer value. This indicates that, amid economic recovery, consumption upgrading, and digital transformation in the post-pandemic period, the competitive advantage of China’s hotel industry is progressively shifting from experience-based competition, primarily centered on service performance, to strategic competition focused on systemic capabilities and the collaborative creation of customer value. In other words, the essence of competitiveness is no longer merely the accumulation of service quality but rather the hotel’s ability to achieve synergistic integration among its operational system, service processes, and customer perception. The results of this study provide empirical support and a theoretical explanation for this transformation trend.

Theoretical implications: This study expands and deepens the structured understanding of hotel competitiveness. By integrating internal capabilities (operational characteristics), service quality and customer satisfaction into a capability-to-value-to-performance chain, it elucidates the dynamic transmission pathway of competitiveness formation, offering a systematic explanation of the multi-layered mechanism of competitive advantage in the hotel industry. This integrated perspective shifts the study of hotel competitiveness from static resource ownership to a dynamic value creation logic, supplementing existing literature on the micro-foundations of competitive advantage. Simultaneously, this study connects the resource-based view (RBV) and service-led logic (SDL) theoretical perspectives, demonstrating that a company’s core competitiveness is ultimately realized through customer-perceived value, thus theoretically constructing a logical chain of resources–value–competitive advantage. This study presents an original competitiveness model for service-oriented economies in transition, utilizing the Chinese hotel industry as a research context. This competitiveness framework possesses significant theoretical universality. The research findings provide significant empirical evidence for understanding how hotels in emerging markets achieve strategic competition through capability enhancement and customer value generation, while also offering scholarly insights into how the global hotel industry can sustain its competitive advantage in the post-pandemic landscape.

Practical implications: The primary beneficiaries of this research are hotel managers, industry policymakers, and institutions involved in higher education and vocational training. For hotel managers, the findings suggest that competitive advantage no longer depends solely on improving individual service quality but instead on the company’s systematic ability to link operational efficiency, service consistency, and customer satisfaction. Based on the importance rankings in Table 5 and the regression analysis in Table 6, three concrete priorities can be identified. First, managers should focus resources on the highest-ranked operational characteristics—sustainability practices, digital technology adoption, continuous product and service innovation, and pricing capability—as the core levers of competitiveness. Second, service quality should be managed as a process bridge between operations and the customer interface through standardized service processes, appropriate digital touchpoints, and targeted staff training so that these operational strengths are visible to guests. Third, customer satisfaction should be monitored as a leading KPI for competitive performance, using satisfaction scores, online reviews, and repeat-purchase behavior to guide adjustments in operations and service design. Implemented together, these measures support the shift from a service-execution-oriented organization to a strategy-driven, capability-to-value logic in which investments in operational characteristics are systematically converted into customer-perceived value and competitive performance. Furthermore, the results provide an empirical foundation for industry regulators and policymakers to develop and evaluate strategies that enhance industry competitiveness. Currently, China’s hotel industry is at a critical stage of simultaneous industrial restructuring and consumption upgrading. Industry policy should transition from singular operational standards to comprehensive development of competitiveness. Future industry standards and certification systems may utilize the findings of this research, adopting a multi-dimensional strategy to foster sustainable, high-quality growth in the industry.

Social implications: The multi-dimensional competitiveness framework proposed in this research also has implications for education, employment, and sustainable development. For education and training institutions, it provides a theoretical reference for curriculum reform and vocational education upgrading, encouraging programs that develop not only service skills but also strategic planning, digital management, sustainability, and innovation capabilities. By enhancing the integration of industry and education, as well as fostering collaboration between schools and enterprises, a talent cultivation system that combines theory, practice, and innovation can be established to support stable employment and skill upgrading for hospitality workers. This system would contribute to the structural advancement, brand enhancement, and internationalization of China’s hotel industry and aligns with the broader social objective of building a high-quality, sustainable service economy.

Limitations and future research: While this study provides a comprehensive reflection of the overall competitive landscape of China’s hotel industry, several limitations remain that need further investigation. This study employs cross-sectional data, which does not account for the dynamic effects of variables that fluctuate over time. Future research may investigate the evolution of hotel competitiveness throughout economic cycles, regulatory changes, or market fluctuations by longitudinal data analysis, thereby elucidating the sustainability and dynamic formation mechanisms of competitiveness. Second, the data in this study predominantly originates from self-assessment questionnaires completed by managers. Although managers have a high level of understanding of hotel operations, biases such as social expectations or organizational self-reinforcement may still exist. Future studies may integrate diverse data sources, including customer satisfaction surveys, internet reviews, and financial performance metrics, employing multi-level data integration and cross-validation to enhance the robustness and explanatory ability of the model outcomes. Third, although this study has broad sample coverage and strong external representativeness, regional differences and business model diversity still exist within China’s hotel industry. Different types of enterprises may exhibit heterogeneity in their competitive strategies and capability structures. Future research may investigate the differences in competitiveness formation mechanisms among hotels with diverse business models and ownership structures through group analyses or comparative research methodologies. Subsequently, future studies may adopt a cross-cultural and international comparative approach, comparing Chinese hotel operations with those in other developing market nations or established tourism economies, thereby offering empirical evidence for international development.