The Effect of Brand on the Impact of e-WOM on Hotels’ Financial Performance

Elisabetta Raguseo () and Claudio Vitari ()
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Elisabetta Raguseo: Polito - Politecnico di Torino = Polytechnic of Turin
Claudio Vitari: LAB IAE Paris - Sorbonne - IAE Paris - Sorbonne Business School

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Abstract: Travelers increasingly consider electronic word of mouth (e-WOM) from online review platforms when making their accommodation decisions. Theory predicts that e-WOM increases sales, but little is known regarding the role that branding plays in the relation between e-WOM and hotels\textquoteright financial performance. This study relied on financial data (including Revenue per Available Room\textemdashRevPAR\textemdashand sales profitability) and 34,164 online customer reviews gathered from TripAdvisor (as a proxy for e-WOM) based on panel data from 221 hotels, including not-branded and branded chain hotels in France from 2005 to 2013. The results show that the volume of reviews has no effect on RevPAR growth for branded chain hotels and a positive effect on RevPAR growth for not-branded chain hotels. In addition, the direct effect of the valence of online reviews and its interaction effect with the yearly and cumulative volume of online reviews on RevPAR growth and sales profitability is shown to apply to not-branded chain hotels but not to branded chain hotels. This study contributes to the e-WOM literature by revealing the role of a brand in e-WOM\textquoterights impact on hotel financial performance. Based on our results, managers of branded chain hotels should know that they might find it difficult to leverage e-WOM to achieve higher RevPAR growth and greater sales profitability, as their economic advantages derive from their brand instead of e-WOM.

Keywords: financial performance; e-WOM; Branded chain hotels; panel data (search for similar items in EconPapers)
Date: 2017-01-12
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01656399
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Citations: View citations in EconPapers (5)

Published in International Journal of Electronic Commerce, 2017, 21 (2), pp.249 - 269. ⟨10.1080/10864415.2016.1234287⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01656399

DOI: 10.1080/10864415.2016.1234287

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