The negative effect of scarcity cues on consumer purchase decisions in the hospitality industry during the COVID-19 pandemic

ABSTRACT

Existing literature shows a positive effect of demand-driven scarcity cues on consumer purchase intentions. Hospitality businesses with high market demand tend to be preferred as consumers perceive these services to be popular and have superior quality. In this research, we demonstrate that, due to the COVID-19 pandemic, consumers form a novel inference about demand-driven scarcity cues consumers consider scarce hospitality businesses to be less safe to consume. This new scarcity-safety inference in turn lowers consumer purchase intentions and preferences because the scarcity-safety inference is more diagnostic than scarcity-popularity and scarcity-quality inferences in the current pandemic. Furthermore, when consumers are presented with more diagnostic external information (e.g., customer reviews) or when the consumption context lowers safety concerns (e.g., order food online and consume at home), the main negative effect of scarcity cues on consumer purchase decisions is attenuated. These findings provide important managerial implications for hospitality businesses.