Brand experience, customer relationship marketing, and customer-based brand equity of budget hotels in Indonesia: The mediating role of word of mouth

The Indonesia’s budget hotel sector has seen significant growth, with an 87% increase in budget hotels compared to a 13% increase in luxury hotels in 2021 (Central Bureau of Statistics, 2021). Despite this rapid development, research on customer-based brand equity (CBBE) in this segment remains limited. This study examined the effect of brand experience and customer relationship marketing (CRM) on customer-based brand equity (CBBE) in Indonesian budget hotels, with word-of-mouth (WOM) as a mediator. A quantitative survey was conducted with 375 budget hotel guests in six Indonesian provinces, and data were analysed using PLS-SEM. The results showed that variables of brand experience positively influenced customer-based brand equity (CBBE). Budget hotels should create memorable experiences across sensory aspects, evoke positive emotions, encourage positive behavior, and stimulate intellectual engagement to enhance brand awareness and cultivate a favourable brand image. Similarly, customer relationship marketing (CRM) positively affected customer-based brand equity (CBBE). Building relationships based on trust, demonstrating commitment, maintaining effective communication, and showing empathy are crucial for fostering customer loyalty and enhancing brand equity. Brand experience and customer relationship marketing (CRM) also had positive effects on word-of-mouth (WOM), suggesting that positive experiences and strong relationships can encourage customers to share their experiences, attract new customers, and reinforce brand reputation. Word-of-mouth (WOM) mediated the relationships between brand experience and customer-based brand equity (CBBE), and between customer relationship marketing (CRM) and customer-based brand equity (CBBE), highlighting its crucial role in amplifying the effects of brand experience and customer relationship marketing (CRM) on brand equity. This study contributes to the theory of customer-based brand equity (CBBE) in the budget hotel sector by integrating brand experience, customer relationship marketing (CRM), and word-of-mouth (WOM) into a comprehensive model. Practically, these findings provide insights for hotel managers and marketers, emphasising the importance of prioritising brand experience and customer relationship marketing (CRM) to differentiate in a competitive market and build strong brand equity. In conclusion, this study highlights the critical role of brand experience, customer relationship marketing (CRM), and word-of-mouth (WOM) in building strong customer-based brand equity (CBBE) for Indonesian budget hotels, offering a valuable framework and actionable insights for managers and marketers in a dynamic and competitive market.