HomeResearch & TeachingJuan Luis Nicolau: Understanding the power of choice

Juan Luis Nicolau: Understanding the power of choice

Photo courtesy of Juan Luis Nicolau
Juan Luis Nicolau (Photos courtesy of Juan Luis Nicolau)

“Not in my wildest dreams would I have seen myself five years ago here in the U.S., teaching and conducting research in one of the world’s leading universities,” says hospitality and tourism management professor Juan Luis Nicolau.

He still marvels at the wonder of his and his family’s move to America and his job at a nationally and internationally ranked hospitality department.

Nicolau is from Muro de Alcoy, Spain, a small town surrounded by mountains about a four-hour drive south-east of Madrid. He didn’t stray far for college or his career, heading to the University of Alicante on the coast for a bachelor’s degree and then a Ph.D. in economics and business and staying on to teach.

He built a distinguished career there, becoming the youngest person in Spain to be appointed a full professor of marketing and receiving numerous honors for both teaching and research, including being considered among 25 of the world’s preeminent tourism researchers.

Seizing a great opportunity

Professor Juan Luis Nicolau.

Professor Juan Luis Nicolau.

He was in his third year as dean of the College of Economics and Business when Virginia Tech beckoned, and Nicolau, who had done stints as a visiting scholar in the U.S., viewed the move as both an “appealing challenge” and a great opportunity for a new experience, personally and professionally.

He moved to Blacksburg in 2017 with his wife and three-year-old son to take up a new post as the Marriott Professor of Revenue Management in the Howard Feiertag Department of Hospitality and Tourism Management.

As a researcher, Nicolau has focused on the decision-making processes behind both individual choices and firm market value.

Some of his recent studies have examined pricing factors of rental accommodations on Airbnb, the effects of distance and first-time visitation on tourists’ length of stay, the effects of online hotel ratings, and the business effects of sports wins.

One thing he has learned is that “while people try to be rational when making their decisions, irrationality still plays a relevant role.”

Understanding the “free-breakfast effect”

Nicolau says, for example, that tourists would not, in principle, abandon their favorite hotel brand to stay at another hotel that offers the same services for only a few dollars less. His research has found, however, that if the latter offers free breakfast — even if the saving remains marginal — people are more willing to ditch their favorite brand.

Nicolau calls this the “free-breakfast effect”: “consumers might condition their choice of a hotel brand in a totally unconscious way, which might lead them to make irrational decisions.”

For consumers, he says, knowing that irrationality can affect decision-making might help people do a more accurate analysis of what leads them to a certain choice.

From a business perspective, the same knowledge might help it structure marketing offers to its advantage.

For example, if a hotel is considering a promotion that would cost it $30 per guest, the hotel would generate more demand if it concentrated the entire $30 discount on one specific service or product — say, breakfast — so that service or product becomes free, rather than offer a $10 discount on each of three different services.

While people try to be rational when making their decisions, irrationality still plays a relevant role.

The total cost for the hotel per guest would be the same in both cases, he points out, but because consumers love free services or products, freebies would generate higher demand than a price reduction on different items amounting to the same discount value.

Tourism pricing has been examined in many scholarly studies, Nicolau says, but “some results show that price effects are not always as apparent as believed, and there are intricate relationships worth further exploration.”

People prefer not losing over winning

In another example, Nicolau notes that the psychological phenomenon of “loss aversion” has been shown to play a big role in consumer decision making: in a nutshell, people prefer not losing $10 to gaining $10; their satisfaction from the former is greater than the latter.

His own work has shown that, in tourism decisions, this phenomenon only partly applies. When the actual price is higher than expected, consumers do tend to opt for a cheaper alternative to avoid loss.

But when the price is lower than expected, “a large proportion of tourists choose another, more expensive alternative whose price approaches their expected price,” Nicolau says. “It seems that once people determine their budget for vacations, they seem to want to use it up for that purpose.”

As a teacher, Nicolau has won acclaim, with awards that include the University of Alicante’s Professor of the Year.

In the classroom, he says, he strives to be passionate, rigorous, and approachable — all qualities he considers crucial to “sparking the student’s enthusiasm for learning.”

Knowledge is necessary, of course, but a good professor, he says, needs to be passionate about his subject and about working with people and preparing course materials. “This passion leads to enthusiasm that rubs off on the students. I always try my best to show that passion about teaching and to create a good environment in class.”

Staying approachable

As for approachability, he says, its importance to him may spring from his small-town origins. Muro de Alcoy, with its 9,000 residents, is the kind of place “where people tend to know each other and wave and stop to chat when they see one another in the street.”

Nicolau has shone in yet another passion, classical guitar. His string of national and international accolades as a performer and composer includes the Gold Medal for composition at the 2015 Global Music Awards for “In the Mariola Mountains,” a concerto for guitar and orchestra, inspired by the mountains around Muro de Alcoy.

Professor Nicolau playing classical guitar.

Professor Nicolau playing classical guitar.

At the concerto’s U.S. premiere on September 29, 2018 in Roanoke, Virginia, Nicolau performed with the Roanoke Symphony Orchestra.

“The feeling you sense when playing in a concert is unique, as you are communicating through music; and when the composition comes from your own creativity and inspiration, this feeling is, simply put, ineffable.”

Making time for classical guitar

Nicolau started learning classical guitar at the age of 10. In the beginning, it was just for fun, he recalls, but by the time he entered his teens, he was playing 16 hours a day during the summers and becoming “very disciplined and systematic” about rehearsing and practicing.

As a student pursuing separate degrees in music and business, he parceled his time carefully, spending mornings at the Conservatory of Music of Alicante and evenings on his business studies.

His many public performances include one with the Alicante Symphony Orchestra, when he was a student, of Rodrigo’s Concierto de Aranjuez. Backstage, someone remarked that “business and music do not have much in common” upon learning that the evening’s young guitar soloist was a business major.

For Nicolau, however, music and academics are definitely interconnected. The creativity that is given free rein in music “leads one to explore, consciously or unconsciously, other dimensions in other facets in life,” he says.

In teaching, being creative helps one make an impact on students, he notes. And, in research, “the art dimension helps one look at things from different angles and prisms.”

The chance to experience the world from a different direction was certainly one reason Nicolau chose to join Virginia Tech. That he has been here for over a year now still amazes him.

“Sometimes I still have to stop and think to truly realize that we have moved to a different continent, and that I am working in one of the world’s top universities in my field.”

-By Sookhan Ho