Are customers' reviews creating value in the hospitality industry? Exploring the moderating effects of market positioning - ScienceDirect - 0 views
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Social Media Influence Tripadvisor effects on hotels user generated reviews
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reviews
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positive effect on hotel revenues
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outside popular destinations
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online visibility
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user-generated reviews
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240 small and medium-sized hotels
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online retailers have thus been gaining increasing market power in influencing customers’ purchases (i.e., Inversini and Masiero, 2014, Silva, 2015, Yen and Tang, 2015) and have improved market transparency and uncertainty for travellers (Toh, Raven, & DeKay, 2011). For this reason, their role is now considered an infomediary (Chen, Yang, & Wang, 2015) because their capability to add value in transactions depends primarily on collecting and processing information about prices, destinations and travellers’ reviews.
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positive effect on hotel revenue growth
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outweighed by a negative effect on gross profit margins.
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managerial implications discuss how hotels should use social media features according to a strategic view based on pursuing the horizontal and vertical differentiation of their services in an attempt to create more economic value from their online visibility and to protect profit margins from the intermediation in their customer relationships.
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MIS idea of how to actually use the information giving from this style of data mining
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Online reviews provide additional information for travellers to mitigate the uncertainty about the quality of a hotel and about its fit to their needs and preferences on accommodations and destinations.
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50,115 user-generated reviews on TripAdvisor,
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bargaining power
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Internet can be a value-destroying mechanism for small businesses and can deter hotels’ capacity to defend profit margins
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empower buyers
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ncrease the degree of rivalry among firms that sell and distribute their products/services
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shake up long-lasting reputations through reviews posted by unmonitored influential opinion makers
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First, online ratings can have a beneficial effect on the occupancy rate of rooms, which is especially important for larger hotels that bear a greater cost of idle capacity, especially in off-peak periods. Second, visibility on social media can allow hotels to apply a price premium thanks to greater economic value generated by market transparency, the reduction of the search costs for both parties involved in the transaction
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brand image of hotels,
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maller hotels with opportunities for market growth in segments in which they have a limited market presence
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exploring the relationship between online visibility and the creation of economic value in terms of increase of sales and profitability for a panel of 240 Italian small and medium hotels
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hotels’ market positioning between their online visibility and profitability.
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we consider only the profitability (the value appropriation achieved through online visibility) and not the increase in sales (the value generation achieved through online visibility) because hotels’ market positioning affects a hotel’s capability to appropriate the economic value brought by online visibility and influences hotels’ ability to negotiate the infomediation fees, which in turn impact hotels’ profitability.
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social networking (i.e., the opportunity that users have to connect with people with similar travel interests, needs or experience) and knowledge sharing
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travellers can more easily find persons who share similar travel preferences and needs. In a similar way, a user consulting travellers’ reviews can see if the reviewer is a member of his/her friends’ social networks on other platforms, such as Facebook.
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beyond allowing hotels to improve their room occupancy rates, online visibility may allow hotels to apply price premiums.
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respond strategically to online reviews
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positive relationship between online visibility and sales
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three different forms.
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first is the rating assigned by users, who can express their evaluations on a quantitative scale.
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rates given by users are distributed over the scale.
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number of reviews that users give to hotels
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we may expect that online visibility on social media – seen as a composite measure of the three above-mentioned elements – can positively impact hotels’ revenue growth
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ive million registered users who visit the platform 30 million times per month on average
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Online visibility has a negative effect on the gross profit margin of a hotel.
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Consequently, high star-rating hotels apply price premiums for their superior quality and attract less price sensitive customers, who have a higher willingness to pay for quality
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we expect that less price sensitive customers are willing to pay more for hotels with higher customer ratings on infomediation platforms because they perceive these hotels to be more valuable
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The relation between online visibility and sales profitability is stronger for hotels with high star-rating.
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iche tourism appears to offer a more meaningful set of experiences, given the knowledge that tourists’ needs and wants are being met
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“what makes a tourism destination truly competitive is its ability to increase tourism expenditure, to increasingly attract visitors while providing them with satisfying, memorable experiences, and to do so in a profitable way” (p. 2).
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However, a number of studies have reported that online user-generated reviews are perceived as more credible than traditional word-of-mouth when they come from persons with similar attitudes and preferences
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Hotels in niche destinations are thus better positioned to extract more economic value from online visibility.
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This article analyzes how user-generated ratings have a positive impact on hotels revenue growth. It looks at this through three different methods: one, ratings that the uses provide, two at how those ratings are "distributed over the scale," and three, the number of reviews that hotel receives. The article observes 240 small to mid scale hotels in Italy. Some issues we see come up revolve around the subjectivity of user-generated reviews and how that can positively and negatively affect hotel occupancy and interest. Ultimately, it appears that hotels that already have a high star rating will benefit most from these user-generated ratings because they have a stronger bargaining tool. The other benefactor are small, niche hotels whose increase viability and unique qualities help it in encouraging new tourism and high level experiences.