The Differential Effects of the Quality and Quantity of Online Reviews on Hotel Room Sales

Abstract

While it is generally accepted that hotel reviews and ratings posted on travel websites drive hotel sales and revenue, the effects of reviews can be parsed into volume (the number of reviews about a hotel) and valence (the ratings in those reviews). This study finds that the two chief aspects of reviews—volume and valence—have different effects on hotels in various chain scale segments. Industry reports and academic studies show that online reviews influence customers’ choice of hotel and thus drive hotels’ revenue per available room (RevPAR). However, the valence of those reviews has a greater effect on luxury hotels’ RevPAR, while the volume of reviews has a greater effect on lower-tier hotels. Based on a study of 319 hotels in the London metropolitan market, these effects apply equally to urban and suburban hotels, as well as chain and independent hotels. The results further indicate that the rating score effect on RevPAR has little impact on the economy and midscale segments, while an increasing number of reviews actually has negative effects on higher-end hotels.