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The Relationship Between Online Rating, Hotel Star Category And Room Pricing Power

Author

Listed:
  • Besim Agusaj

    (Rochester Institute of Technology Croatia, Dubrovnik)

  • Vanda Bazdan

    (Rochester Institute of Technology Croatia, Dubrovnik)

  • Djina Lujak

    (Rochester Institute of Technology Croatia, Dubrovnik)

Abstract

In the digital way of doing business we see a substantial rise of online customer feedback and customer information sharing communities. The role and importance of social media has considerably increased in the past several years and businesses can no longer overlook its impact. For companies, the acceptance of such sources are not only tangential rather they are becoming central in how they approach their operations. Numerous web based platforms that include social networking, online communities and review sites are critical reference points for companies while deciding how to structure and price their products and services. The tourism and hospitality industry is no exception to this phenomenon, as a matter of fact, it is at the very forefront of this new trend that we are observing. Some of these sites are more popular than others, such as TripAdvisor, Booking.com, Travelocity or Expedia but all of them affect how service providers conduct their business, specifically in the area of pricing. The aim of this paper is to examine and quantify the relationship between customer online rating, hotel category and room pricing power in hotel industry. Findings suggest that there is a statistically significant relationship between hotel star category, online rating and service provider’s room pricing power. Moreover, results indicate a strong correlation between TripAdvisor and Booking.com online customer reviews, suggesting that contrary to popular beliefs, TripAdvisor is as reliable as Booking.com.

Suggested Citation

  • Besim Agusaj & Vanda Bazdan & Djina Lujak, 2017. "The Relationship Between Online Rating, Hotel Star Category And Room Pricing Power," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 26(1), pages 189-204, june.
    • Handle: RePEc:avo:emipdu:v:26:y:2017:i:1:p:189-204
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    References listed on IDEAS

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    3. Vijay Mahajan & Eitan Muller & Roger A. Kerin, 1984. "Introduction Strategy for New Products with Positive and Negative Word-of-Mouth," Management Science, INFORMS, vol. 30(12), pages 1389-1404, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    electronic word-of-mouth; pricing power; hotel star category; online rating;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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