Contents lists available at ScienceDirect International Journal of Hospitality Management journal homepage: www.elsevier.com/locate/ijhm A fad or the future? Examining the effectiveness of virtual reality advertising in the hotel industry Xi Y. Leung a , Jiaying Lyu b, ⁎, Billy Bai c a Department of Hospitality and Tourism Management, University of North Texas, 1155 Union Circle #311100, Denton, TX 76203, USA b Department of Tourism and Hotel Management, School of Management, Zhejiang University, 866 Yuhangtang Road, Administration Building, Zijingang Campus, Hangzhou 310058, PR China c William F. Harrah College of Hospitality, University of Nevada, Las Vegas, 4505 Maryland Parkway, Las Vegas, NV 89154, USA ARTICLE INFO Keywords: Virtual reality Hotel advertising Perceptual load theory Elaboration likelihood model Immediate effects Delayed effects ABSTRACT New virtual reality technology presents hotels with wide-ranging marketing, training, and customer service opportunities. The purpose of this study was to explore both the immediate and delayed effects of hotel VR commercials as compared to traditional video commercials. Based on the perceptual load theory and elaboration likelihood model, this study designed and conducted a 2 × 2 laboratory experiment with two stages of data collection. The study demonstrated that VR commercials produced better immediate effects than the traditional commercials, especially for participants with high elaboration likelihood levels. However, the findings also revealed significant decreases in purchase intention among participants watching VR commercials and a sig- nificant improvement in attitudes among participants watching traditional commercials. Both theoretical and practical implications were discussed to leverage the power of VR in marketing. 1. Introduction Cearley and Burke (2018) predicted that user experience was un- dergoing a significant shift in how they perceive and interact with the digital world with the advances of virtual reality (VR) and augmented reality (AR) technology. VR refers to an interactive computer-generated 3D environment completely immersing a user inside it, while AR, as a variation of VR, combines virtual objects with the real world (Azuma, 1997). In the retail world, AR technology has been widely used to change how consumers shop by providing virtual trials of products online, via mobile apps, or through digitally-enhanced mirrors (Bonetti et al., 2018). AR technology has the advantage of not requiring an extra viewing device, whereas VR technology provides a more engaging and immersive virtual environment which blocks out the real world (Bonetti et al., 2018). Therefore, in the hospitality and tourism industry, AR is mainly utilized to enhance visitor on-site interactions, especially at tourist attractions such as museums (e.g., Chung et al., 2018; He et al., 2018; Tussyadiah et al., 2018a,b). VR, on the other hand, is considered a useful promotional tool to provide potential travelers a sensory si- mulation of travel experience beforehand (Gibson and O’Rawe, 2018). As a marketing tool, VR plays an increasingly popular role in moti- vating travelers’ visit intentions and helping consumers with travel decision-making (Cho et al., 2002). A recent report reflected this trend, claiming that nearly half of Millennial consumers used VR to preview their vacation destination (The Priceline Group, 2016). With the prediction that future VR headsets would look like a normal pair of glasses (Lopez, 2016), consumers agreed that VR tech- nology would in the future become as popular as smartphones and change the way people shop (Worldpay, 2017). With the help of im- mersive VR technology, business commercials have improved imagery richness and vividness, which may lead to more positive consumer re- sponses (Van Kerrebroeck et al., 2017). VR is especially helpful in ex- perience marketing, which focuses on the experience of using a product rather than specific features (Van Kerrebroeck et al., 2017). As an in- dustry selling experience, the hospitality and tourism industry became pioneer in experimenting with VR commercials in a variety of sectors, including destinations, hotels, and airlines. In the hotel industry, Shangri-La Hotels and Resorts, an Asian luxury hotel brand, was the first hotel brand to announce the integration of virtual reality (VR) experiences into hotel commercials in 2015 (Shangri-La, 2015). In 2016, Hilton and Best Western followed this initiative and launched their own VR videos (Ting, 2016). Since then, it has become quite popular for hotels to showcase rooms with 360-degree videos (Aghayev, 2017). To business practitioners, advertising effectiveness has remained as the key issue in determining the outcomes of medium choice (Hall, https://doi.org/10.1016/j.ijhm.2019.102391 Received 19 February 2019; Received in revised form 17 September 2019; Accepted 22 September 2019 ⁎ Corresponding author. E-mail addresses: xi.leung@unt.edu (X.Y. Leung), Jiaying_lu@zju.edu.cn (J. Lyu), billy.bai@unlv.edu (B. Bai). International Journal of Hospitality Management xxx (xxxx) xxxx 0278-4319/ © 2019 Elsevier Ltd. All rights reserved. Please cite this article as: Xi Y. Leung, Jiaying Lyu and Billy Bai, International Journal of Hospitality Management, https://doi.org/10.1016/j.ijhm.2019.102391