Does advertising spending improve sales performance?

Hotel managers and investors commonly analyze the impact of advertising spending on firm performance. This paper investigates such an impact using a comprehensive framework incorporating the moderating effects of hotel size and star ratings. We estimated sales performance via dynamic, stochastic frontier modelling. Using longitudinal data from a sample of Slovenian and Croatian hotels, we demonstrate that advertising spending has a positive impact on hotel sales performance, and that the relationship strengthens for larger hotels and hotels with higher star ratings. Theoretical and managerial implications along with directions for future research are also discussed.     

This hotel is family-run! Enabling positive consumer response via perceived hospitableness

Family-run businesses are key players in the hotel industry and provide accommodations in many tourism regions such as the Austrian Alps. To date, research has failed to see the family firm status as a source of competitive advantage for the hospitality industry, despite often being used in practice to attract customers. Through the theoretical lens of signaling theory, this study therefore conducted experiments using fictitious hotel websites with participants from a German online panel (Austria’s largest incoming market) to investigate the effectiveness of family firm brand signals. The results confirm positive effects of communicating the family firm image on consumer response such as word-of-mouth, willingness to pay a price premium, and booking intention. We highlight that this effect is explained by perceived hospitableness. As such, we demonstrate that hotels can capitalize on their unique status by communicating their family firm image.     

CRM and the bottom line: Do all CRM dimensions affect firm performance?

Successful firms often endeavour to assure competitive advantages through the relationships with their customers. Consequently, customer relationship management (CRM) has become of pivotal importance to many firms. This study investigates the effect of each CRM dimension on the performance of hotels. We found that in general hotels should aim to improve CRM capabilities because it has a positive effect on firm performance. Contrary to some previous assumptions, CRM investments did not result in positive performance. These findings are important as hotels strive to allocate resources to improve relationships with customers.     

How do hotel managers react to rating fluctuation?

Rating fluctuation is inevitable for hotels listed on hotel booking platforms, which induces potential consumers’ perception of uncertainty and risk. Managerial response is expected to be effective in enhancing the interaction between hotels and consumers. However, how hotel managers react to rating fluctuation remains unclear. In order to fill this gap in the literature, we collect customer reviews and managerial responses from a leading hotel booking platform and build a panel dataset (hotel*month). The empirical results suggest that (1) rating fluctuation induces more managerial responses and requires more response time; (2) upscale hotels are more likely to conduct frequent and timely responses when facing rating fluctuation; and (3) hotels tend to respond more frequent and timely once rating fluctuation is observed by a larger audience. This study concludes by presenting theoretical contributions to the literature and practical implications for operators of hotel booking platforms and hotel managers.     

A Bayesian non-parametric stochastic frontier model

In this paper, we introduce a new Bayesian non-parametric stochastic frontier (SF) model that addresses the endogeneity problem and relaxes problematic assumptions regarding functional form, and distributional properties. The model can be seen as a competitor to DEA. We show how the model outperforms its parametric counterpart in all critical diagnostic tests. The application we use covers a unique sample of US hotels that operate within competitive clusters. We utilize the efficiency results obtained from this model to shed light on the extent to which performance spillover (i.e. agglomeration effects) may differ based on the varied characteristics of hotels within these clusters. We obtain interesting findings and discuss their implications for hotels contemplating future co-location strategies.     

Competitive actions and firm performance of hotels in Hong Kong

Drawn on the recent action–reaction perspective in competitive dynamics studies, this paper suggests that not only the number of competitive actions, but also the extent of differences of action portfolios within and between firms are relevant in determining a firm's performance. A distinction of these differences of competitive action portfolios among firms and the corresponding measures to capture these effects are proposed. This study of Hong Kong high tariff hotels confirmed that diversifying a hotel's portfolio of actions, but not too much different from the competitors, would help hotels to achieve higher financial performance in a competitive market.     

How hotel owner-operator goal congruence and GM autonomy influence hotel performance

A principal-agent relationship exists between hotel owners and the management companies which often operate their hotels. In addition, they both act as principals to a mutual agent, the hotel's General Manager, who is tasked with trying to achieve each parties' objectives. Extensive research on hotel management agreements which govern the owner-operator relationship has demonstrated that these objectives are often incongruent. However, the property-level managerial and performance implications of their goal incongruence has not been empirically examined. This study analyzes these issues using a matched sample of surveys from both owners and operators across 64 hotels operated under hotel management agreements. Using structural equations modeling, we demonstrate that owner-operator goal congruence positively impacts hotel performance and that this relationship is both mediated and moderated by the hotel General Manager's autonomy.     

Determinants of Customer Satisfaction in the Hotel Industry: An Application of Online Review Analysis

This study illustrates that determinants of customer satisfaction in hospitality venues can be identified through an analysis of online reviews. Using text mining and content analysis of 42,668 online traveler reviews covering 774 star-rated hotels, the study found that transportation convenience, food and beverage management, convenience to tourist destinations and value for money are identified as excellent factors that customers booking both luxury and budget hotels consider important and for which the performance is much satisfactory to them. Customers paid more attention to, but were less satisfied with, bed, reception services and room size and decoration. Most determinants of customer satisfaction also showed a consensus over luxury versus budget hotels, except for factors referring to lobby and sound insulation. As per its findings, the article concludes by presenting theoretical and managerial implications.     

Revenue functions for hotels within clusters

In this note, we propose a flexible revenue function that considers the characteristics of hotels that operate within competitive clusters. We show that without a need to estimate a demand function one can estimate elasticities of demand, conjectural variations, revenue efficiency, technical change, efficiency change, productivity growth, as well the Lerner index. We use a Bayesian approach to fit the model on a sample of US hotels.     

Relationship between customer sentiment and online customer ratings for hotels - An empirical analysis

This study aims to establish a relationship between customer sentiments in online reviews and customer ratings for hotels. Customer sentiment refers to the emotions expressed by customers through the text reviews. These sentiments can be positive, negative or neutral. The study explores customer sentiments and expresses them in terms of customer sentiment polarity. Our results find consistency between customer ratings and actual customer feelings across hotels belonging to the two categories of premium and budget. Customer sentiment polarity explains significant variation in customer ratings across both the hotel categories. With regard to managerial implications, the study finds that, when compared with premium hotels, managers of budget hotels should improve their staff performance and hotel services. The present study is not exhaustive and other factors like customer review length and review title sentiment can be analyzed for their effects on customer ratings.     

Exploring the impact of personalized management responses on tourists’ satisfaction: A topic matching perspective

As an online reputation management tool, hotel managers increasingly rely on management responses to online reviews to improve the electronic word of mouth (eWOM). Due to the substantial heterogeneity of textual reviews with different topics, it is particularly challenging to personalize the response for customer relationship management. Based on a panel data of 500 hotels in the state of Texas collected from TripAdvisor, this study examines the influence of personalized management responses on rating increase from a topic matching perspective. The empirical results show that (1) a high level of topic matching of management response leads to an increase of hotel online rating; (2) a high valence and a large variation of existing rating weaken the positive influence of such personalized management response; (3) the influence is stronger for economy hotels compared to luxury ones. Lastly, practical implications are provided.     

The influence of uncertain demand on hotel capacity

We examine the effects of uncertain demand on hotel capacity using the operation data of international tourist hotels in Taiwan from 1996 to 2008. Abel (1983) argued that demand uncertainty leads to an increase in the capacity of a firm if uncertain demand takes the form of output price uncertainty for the competitive market. We empirically test Abel's model. Our findings support the demand uncertainty hypothesis in Abel's model. Moreover, our results indicate that effective management of hotel capacities is a more important issue for managers of medium-sized hotels than for small or large-sized hotels in the Taiwanese hotel industry.     

Impacts of quality certification on online reviews and pricing strategies in the hospitality industry

Certification of firm quality is an important strategic concern for industry practitioners, since it entails explicit and implicit investments in time, personnel training and finances. Since the impact of certification influences customers in various ways, the purpose of this study is to determine what impact quality certification has on both online reputation and price premiums. This study extends the scope of extant literature by including various types of accommodations beyond typical hotels. Two-stage least squares (2SLS) is applied revealing an increase in online ratings for accommodations after certification relative to before, supporting that quality certifications may improve online ratings. Using spatial two-stage least squares (S2SLS), this study demonstrates significantly higher valence in online ratings for certified relative to non-certified accommodations, as well as showing a price premium in certified over non-certified accommodations.     

Can Response Management Benefit Hotels? Evidence from Hong Kong Hotels

With the growing influence of online reviews, more hotels are adopting online response management, but whether this works and benefits a hotel has rarely been studied. In this research, we study the impact of response management on hotel online ratings using data retrieved from TripAdvisor with a focus on Hong Kong hotels. We find that (1) high class hotels are more likely to adopt response management; (2) there is no significant difference among different hotel classes in terms of response rate; and (3) targeted response management has a significant positive effect on hotel ratings. In addition, Asian customers tend to give lower ratings than Western customers. We outline specific implications for hotel managers and their online management and offer suggestions for future research based on the empirical findings.     

To be similar or to be different? The effect of hotel managers’ rote response on subsequent reviews

Hotel managers increasingly compose rote responses (e.g., similar responses repeated from prior responses) to reviews when dealing with customers' opinions while improving efficiency and saving cost. However, such responses may be ineffective because they are unspecific and add little information to reviewers' comments. To address this dilemma, we examine the degree of managers' rote responses to identify the similarity of managers' response texts. Basing on panel data of 334,671 reviews and 169,794 manager responses from 868 hotels in TripAdvisor, we find that customers leave fewer reviews and lower review valence during the subsequent month, when the level of roteness of managers’ responses is higher. However, rote responses only decrease the volume of subsequent positive reviews but have no influence on the volume of negative reviews. Moreover, such effects are weaker for chain hotels than for independent ones. Therefore, managers should differentiate their responses to online reviews, particularly for independent hotels.     

Insights into managers’ response behavior: Priority and effort

Managerial response plays an important role in bridging customers and hotel managers in the online environment. Extant studies have examined the effect of managerial response on online reputation, customer satisfaction, and customer revisits, among others. However, the actual response behavior of managers to customer reviews remains unclear. To address this research gap, we collect data from a leading travel website and empirically analyze the response priority and effort of managers. Findings show that managers have preferences in their responses. (1) Managers prioritize digest, negative, and long reviews when responding to customers. The probability of managerial responses to digest reviews is 1.9 times that of general reviews. (2) Managers also exert additional effort when responding to such reviews. A one-score decrease in customer review leads to an approximately 17-word increase in managerial response. This study concludes by presenting the theoretical and managerial implications of these findings.     

Disintermediation of travel agents in the hotel industry

The trend of massive disintermediation is threatening the livelihood of travel agents. This paper investigates the disintermediation of travel agents in the hospitality industry when hotels take distribution back into their own hands by setting up websites that allow guests to make bookings online. We analyze the factors affecting an agent's possible responses to a hotel's destructive acts, and put forward suggestions to agents to fight against the trend of disintermediation. We also point out what hotels can do to improve the quality of their relationship with their agents should they decide to launch their online channel.     

How does social capital influence the hospitality firm's financial performance? The moderating role of entrepreneurial activities

Although previous studies have examined the relationship between social capital and firm performance under boundary conditions such as firm age, industry characteristics, and institutional conditions, the literature is silent on the types of firm activities linking social capital to financial performance. This study investigates the moderating role of firm-level entrepreneurial activities (service innovation, corporate venturing and strategic renewal) on the relationship between social capital and financial performance in a sample of Chinese hotels. The findings indicate that the interaction of external and internal social capital has a positive effect on financial performance. In addition, innovation and corporate venturing enhance the relationship between financial performance and social capital. To achieve a competitive advantage, hospitality firms should not only accumulate social capital but should also deliberately implement strategies that enhance entrepreneurial activities to fully unleash the potential of social capital.