The Effect of Private Customer-Manager Social Engagement Upon Online Booking Behavior

Abstract

Owing to the impact of third-party commissions upon hotel profitability, many hotel brands have actively engaged in book direct campaigns, but to date, no large-scale longitudinal effort has been conducted to systematically evaluate direct booking behavior (i.e., direct versus online travel agency [OTA]). In this study, we use three years of transactional data from a large hotel brand to evaluate booking channel choices. To address the dynamic nature of the longitudinal individual-level data, we use a hidden Markov model (HMM), allowing us to evaluate both short- and long-term effects. Using the HMM, we evaluate the latent loyalty status of customers through their observed online booking channel behavior (i.e., direct versus OTA). As a result, we find that customer–manager engagement through guest satisfaction surveys (and managerial responses to those surveys) has a long-term effect on consumer propensities to book direct, gradually increasing customer loyalty to the brand. Specifically, we find that positive customer feedback signals a greater willingness to book direct in subsequent purchases. Moreover, managerial responses to the satisfied customer result in greater tendency to remain loyal and book direct. Second, the membership program tier of the customer has a significant short-term effect on the consumer’s propensity to book direct. Low-loyalty customers’ direct booking tendency increases as soon as they join the membership program. These findings not only illustrate the impact of membership status upon channel choice but also indicate the effect of the customer’s voice and the resulting managerial response upon booking behaviors over time.