Role of e-WOM in hospitality market pricing

• Authors: Kościółek Szczepan
• Languages of publication: EN

Abstracts

EN

Aim/purpose – Online assessments are one of the main factors determining a customer’s choice of accommodation. This article examines their relationship to prices in the low and high season in Cracow’s hospitality market. The question of which attributes in hotel ratings explain the change in price levels was investigated. Design/methodology/approach – The inference was based on ratings and hotel room offers published on the Booking.com platform. Data were collected and estimated for the representative number of 97 hotels in Cracow. Regression analysis was then used to estimate the model. Findings – The results of the analysis showed that price levels for the high and low seasons are correlated with ratings for comfort and location. It is more precise to use these variables as an explanation for prices in the high season. Guests’ perceptions of comfort and location are combined with other hotel features. Research implications/limitations – The study showed which of the hotel parameters should be enhanced when rationally increasing price levels. The limitations of the study are that it covered only one Polish city, collected data from a single website, and omitted other variables to explain the prices of hotel rooms. Originality/value/contribution – This is one of the first papers to examine the correlation between electronic consumer ratings and price levels in the Polish hospitality market and one of few investigations based on the role of e-WOM for the pricing of all objects in the sector, not just for a specific category of hotels.

Keywords

EN

Consumer ratings; e-WOM; Hospitality market; Online reviews; Pricing

• Publisher: Uniwersytet Ekonomiczny w Katowicach
• Journal: Journal of Economics and Management
• Year: 2017
• Volume: 29
• Pages: 58-74

Contributors

author

Kościółek Szczepan

• Institute of Entrepreneurship. Faculty of Management and Social Communication. Jagiellonian University, Cracow, Poland

References

• Abrate G., Fraquelli G., Viglia G. (2012): Dynamic pricing strategies: Evidence from European hotels. “International Journal of Hospitality Management”, Vol. 31(1), pp. 160-168, https://doi.org/10.1016/j.ijhm.2011.06.003.
• Arndt J. (1967): Role of product-related conversations in the diffusion of a new product. “Journal of Marketing Research”, Vol. 4(3), pp. 291-295, https://doi.org/10.2307/3149462.
• Badinelli R. (2000): An optimal, dynamic policy for hotel yield management. “European Journal of Operational Research”, Vol. 121(3), pp. 476-503, https://doi.org/10.1016/S0377-2217(99)00046-6.
• Bayoumi A.E.M., Saleh M., Atiya A.F., Aziz H.A. (2013): Dynamic pricing for hotel revenue management using price multipliers. “Journal of Revenue and Pricing Management”, Vol. 12(3), pp. 271-285, https://doi.org/10.1057/rpm.2012.44.
• Borkowski K., Grabiński T., Seweryn R., Wilkońska A., Mazanek L., Grabińska E. (2015): Ruch turystyczny w Krakowie w 2015 roku. MOT, Kraków.
• Chatterjee P. (2001): Online reviews – do consumers use them? In: ACR 2001 proceedings. Eds. M. C. Gilly, J. Myers-Levy. Association for Consumer Research, Provo, UT, pp. 129-134.
• Choi T.Y., Chu R. (2001): Determinants of hotel guests’ satisfaction and repeat patronage in the Hong Kong hotel industry. “International Journal of Hospitality Management”, Vol. 20(3), pp. 277-297, https://doi.org/10.1016/S0278-4319(01)00006-8.
• Coenders G., Espinet J.M., Saez M. (2003): Predicting random level and seasonality of hotel prices: A latent growth curve approach. “Tourism Analysis”, Vol. 8(1), pp. 15-31, https://doi.org/10.3727/108354203108750148.
• Collins M., Parsa H.G. (2006): Pricing strategies to maximize revenues in the lodging industry. “International Journal of Hospitality Management”, Vol. 25(1), pp. 91-107, https://doi.org/10.1016/j.ijhm.2004.12.009.
• Duverger P. (2013): Curvilinear effects of user-generated content on hotels’ market share: A dynamic panel-data analysis. “Journal of Travel Research”, Vol. 52(4), pp. 465-478, https://doi.org/10.1177/0047287513478498.
• Espinet J.M., Saez M., Coenders G., Fluvià M. (2003): Effect on prices of the attributes of holiday hotels: A hedonic price approach. “Tourism Economics”, Vol. 9, No. 2, pp. 165‐177, https://doi.org/10.5367/000000003101298330.
• Gretzel U., Yoo K.H. (2008): Use and impact of online travel reviews. “Information and Communication Technologies in Tourism 2008”, pp. 35-46, https://doi.org/10.1007/978-3-211-77280-5_4.
• GUS (2015): Turystyka w województwie małopolskim. Opracowanie sygnalne – nr 3. www.krakow.stat.gov.pl/ (access: 21.05.2017).
• Hartline M.D., Ross-Wooldridge B., Jones K.C. (2003): Guest perceptions of hotel quality: Determining which employee groups count most. “Cornell Hotel and Restaurant Administration Quarterly”, Vol. 44(1), pp. 43-52, https://doi.org/10.1016/S0010-8804(03)90045-0.
• Hartman R.S. (1989): Hedonic methods for evaluating product design and pricing strategies. “Journal of Economics and Business”, Vol. 41(3), pp. 197‐212, https://doi.org/10.1016/0148-6195(89)90018-0.
• Hung W.T., Shang J.K., Wang F.C. (2010): Pricing determinants in the hotel industry: Quantile regression analysis. “International Journal of Hospitality Management”, Vol. 29(3), pp. 378-384, https://doi.org/10.1016/j.ijhm.2009.09.001.
• Israeli A.A. (2002): Star rating and corporate affiliation: Their influence on room price and performance of hotels in Israel. “International Journal of Hospitality Management”, Vol. 21(4), pp. 405-424, https://doi.org/10.1016/S0278-4319(02)00037-3.
• Kim W.G., Lim H., Brymer R.A. (2015): The effectiveness of managing social media on hotel performance. “International Journal of Hospitality Management”, Vol. 44, pp. 165-171, https://doi.org/10.1016/j.ijhm.2014.10.014.
• Ladhari R., Michaud M. (2015): eWOM effects on hotel booking intentions, attitudes, trust, and website perceptions. “International Journal of Hospitality Management”, Vol. 46, pp. 36-45, https://doi.org/10.1016/j.ijhm.2015.01.010.
• Law R., Chan I., Goh C. (2007): Where to find the lowest hotel room rates on the internet: The case of Hong Kong. “International Journal of Contemporary Hospitality Management”, Vol. 19(6), pp. 495-506, https://doi.org/10.1108/09596110710775156.
• Li X., Hitt L.M. (2008): Self-selection and information role of online product reviews. “Information Systems Research”, Vol. 19(4), pp. 456-474, https://doi.org/10.1287/isre.1070.0154.
• Liu S., Law R., Rong J. et al. (2013): Analyzing changes in hotel customers’ expectations by trip mode. “International Journal of Hospitality Management”, Vol. 34, pp. 359-371, https://doi.org/10.1016/j.ijhm.2012.11.011.
• Lockyer T. (2005a): Understanding the dynamics of the hotel accommodation purchase decision. “International Journal of Contemporary Hospitality Management”, Vol. 17(6), pp. 481-492, https://doi.org/10.1108/09596110510612121.
• Lockyer T. (2005b): The perceived importance of price as one hotel selection dimension. “Tourism Management”, Vol. 26(4), pp. 529-537, https://doi.org/10.1016/j.tourman.2004.03.009.
• Luo Q., Zhong D. (2015): Using social network analysis to explain communication characteristics of travel-related electronic word-of-mouth on social networking sites. “Tourism Management”, Vol. 46, pp. 274-282, https://doi.org/10.1016/j.tourman.2014.07.007.
• Mauri A.G., Minazzi R. (2013): Web reviews influence on expectations and purchasing intentions of hotel potential customers. “International Journal of Hospitality Management”, Vol. 34, pp. 99-107, https://doi.org/10.1016/j.ijhm.2013.02.012.
• Nielsen Company (2014): E-commerce. Evolution or revolution? www.nielsen.com (access: 21.05.2017).
• Norman G. (2010): Likert scales, levels of measurement and the “laws” of statistics. “Advances in Health Sciences Education”, Vol. 15(5), pp. 625-632, https://doi.org/10.1007/s10459-010-9222-y.
• Öğüt H., Onur Taş B.K. (2012): The influence of internet customer reviews on the online sales and prices in hotel industry. “The Service Industries Journal”, Vol. 32, No. 2, February, pp. 197-214, http://dx.doi.org/10.1080/02642069.2010.529436.
• Park D.H., Lee J., Han I. (2007): The effect of on-line consumer reviews on consumer purchasing intention: The moderating role of involvement. “International Journal of Electronic Commerce”, Vol. 11(4), pp. 125-148.
• Rosen S. (1974): Hedonic prices and implicit markets: Product differentiation in pure competition. “Journal of Political Economy”, Vol. 82(1), pp. 34-55, https://doi.org/10.1086/260169.
• Senecal S., Nantel J. (2004): The influence of online product recommendations on consumers’ online choices. “Journal of Retailing”, Vol. 80(2), pp. 159-169, https://doi.org/10.1016/j.jretai.2004.04.001.
• Tellis G. (1986): Beyond the many faces of price: An integration of pricing strategies. “Journal of Marketing”, Vol. 50(4), pp. 146-160, https://doi.org/10.2307/1251292.
• Thrane C. (2005): Hedonic price models and sun-and-beach package tours: The Norwegian case. “Journal of Travel Research”, Vol. 43(3), pp. 302-308, https://doi.org/10.1177/0047287504272034.
• Thrane C. (2007): Examining the determinants of room rates for hotels in capital cities: The Oslo experience. “Journal of Revenue and Pricing Management”, Vol. 5, No. 4, pp. 315‐323, https://doi.org/10.1057/palgrave.rpm.5160055.
• Toh R.S., Raven P., DeKay F. (2011): Selling rooms: Hotels vs. third-party websites. “Cornell Hospitality Quarterly”, Vol. 52(2), pp. 181-189, https://doi.org/10.1177/1938965511400409.
• Vermeulen I.E., Seegers D. (2009): Tried and tested: The impact of online hotel reviews on consumer consideration. “Tourism Management”, Vol. 30(1), pp. 23-127, https://doi.org/10.1016/j.tourman.2008.04.008.
• Westbrook R.A. (1987): Product/consumption-based affective responses and postpurchase processes. “Journal of Marketing Research”, Vol. 24(3), pp. 258-270, https://doi.org/10.2307/3151636.
• Yacouel N., Fleischer A. (2012): The role of cybermediaries in reputation building and price premiums in the online hotel market. “Journal of Travel Research”, Vol. 51(2), pp. 219-226, https://doi.org/10.1177/0047287511400611.
• Ye Q., Law R., Gu B., Chen W. (2011): The influence of user-generated content on traveler behavior: An empirical investigation on the effects of e-word-of-mouth to hotel online bookings. “Computers in Human Behavior”, Vol. 27(2), pp. 634-639, https://doi.org/10.1016/j.chb.2010.04.014.
• Zhang Z., Ye Q., Law R. (2011): Determinants of hotel room price: An exploration of travelers’ hierarchy of accommodation needs. “International Journal Contemporary Hospitality Management”, Vol. 23(7), pp. 972-981, https://doi.org/10.1108/09596111111167551.
• Zhang H., Zhang J., Lu S., Cheng S., Zhang J. (2011): Modeling hotel room price with geographically weighted regression. “International Journal of Hospitality Management”, Vol. 30(4), pp. 1036-1043, https://doi.org/10.1016/j.ijhm.2011.03.010.
• [www 1] http://www.phocuswright.com/Travel-Research/Research-Updates/2012/Ledby-Booking-com-OTAs-Fuel-European-Online-Travel-Growth (access: 21.05.2017).

Identifiers

ISSN

1732-1948