Do hotel financial factors influence satisfaction?
A significant recent body of literature has investigated ‘electronic word of mouth’ for hotels, particularly TripAdvisor ratings of experiences. Our study adds a new dimension by examining the impact of hotel financial measures on the generation of positive word-of-mouth. We investigate whether long-term investment by hotels as well as day-to-day expenditure influences the extent to which guests rate their experiences highly on online reviewing platforms.
Financial accounts of a hotel are a snapshot of the long-term (assets) and short-term (expenses) investment of a hotel in service quality. Hotel service quality has been linked to guest satisfaction with surveys, but the survey approach is both costly and time-consuming to implement, meaning alternative proxies for service quality are beneficial for arriving at generalized findings. It is also not clear how guests relatively value short and long-term investment, as well as different aspects of service investment, in terms of judging service quality.
Our choice of financial variables allows us to explore this, including the quality of amenities and experiences (fixed assets and sales expenses) and service efficiency (cost of goods sold and administration expenses). Thus, while prior research shows that financial investment is used by hotels to improve service quality, we are able to show which form of service investment is particularly important.
We show that financial measures are important determinants of positive online ratings. Of particular importance in terms of costs is new investment rather than past investment in fixed assets, and guests prefer more efficient hotel service delivery. Guests appear to have different service expectations per star level, but they also do not seem to be sensitive to price charged at the time of evaluating experience.
Methodology
Customer ratings of their hotel stay are obtained through scraping TripAdvisor, the leading international platform of reviewing hotels. We use the package Scrapy in Python to obtain individual guest ratings, and then aggregate the individual ratings into annual hotel ratings. Then econometric analysis is applied.
Applications and beneficiaries
We recommend these findings for consideration in the design of hotel guest experience.
Reference to the research
C. Alexakis et al (2021) Do hotel financial factors influence satisfaction? Annals of Tourism Research, Volume 90, 2021, 103128, ISSN 0160-7383
