The Significance of Online Reviews for Hotel Entrepreneurial Success

Introduction

Online reviews create an outstanding phenomenon for consumers who want to get better experience at making a purchase decision. Electronic word of mouth (e-WOM) is perceived as a marketing tool with significant influences on hospitality industry (Li et al., 2009, Kamble et al., 2020). When customers are planning to travel or make a hotel booking, they usually seek for advice from reviews as a tool in decision-making due to unfamiliarity with new destinations (Sparks & Browning, 2011). Consumers now rely on e-WOM as a tool for seeking information about intangible products as hotels, restaurants and online service (Litvin, Goldsmith & Pan, 2008). Easily accessible internet allows customers to access reviews posted by previous customers which helps in purchase decision making. Internet provides suitable platforms for eWOM to operate such as blog, forum, and travel websites. However, the appearance of social media platforms as Facebook, Twitter, and Instagram have brought about new dimensions for online reviews (Xiang & Gretzel, 2010). Consumer can post their reviews online as a part of their reaction when they feel disappointed by a service or betrayed by a hotel (Gregoire & Fisher, 2008). In addition, the motivation for posting review comes from multitude of reasons but the main reason is the concern for other consumers (Hennig-Thurau et al., 2004). As a result, customers freely discuss and exchange their experiences and comments about hotel quality and service to their peers, family, friends and potential customer. Some review website like TripAdvisor are applying algorithms to make online reviews become more trustworthy and reduce biased negative reviews rate (TripAdvisor, 2018). Therefore, the quality of reviews have improved which could increase the trust and confidence from consumers. In general, customers rely on online platforms like social media, forums, blogs and travel website to make purchase decision (Xiang & Gretzel, 2010). Consumers are sensitive and tend to reduce risk by collecting other’s opinion regarding online purchase decision because independent third-party opinion are relatively unbiased and uncontrolled from hoteliers (Sparks & Browning, 2011). In addition, advice and recommendation from other customers raise more influence on service and product choice than any public relation tool from hotels (Chen, 2008).

On the other hand, online reviews are giving both challenges and opportunities for hotel entrepreneurs. Study found that e-WOM can help to develop trust and reputation for hoteliers (Riegelsberger, Sasse & McCarthy, 2005). Positive reviews can build good image and sentiment from the customer, whilst negative reviews can harm hotel booking intention and damage hotel image (Sparks & Browning, 2011). Thus, online reviews influence potential customer perception and actions, despite it being positive or negative (Vermeulan & Seegards, 2009). As a result, it is important to conduct research about e-WOM on consumer decision-making due to its ability to influence decisions (Hennig-Thurau et al., 2004). Few studies have investigated the impact of e-WOM on booking intention of customers (Lee, Park & Han, 2008; Phillips et al., 2017; Tsao et al., 2015). However, it’s limited and there is need for more in depth studies. In general, online reviews have a strong impact on customer booking intention, although not all reviews influence on customer purchase decision (Sparks & Browning, 2011). This study intends to highlight the impact of online reviews on booking intention. In order to achieve it, this conceptual paper investigates a range of factors such as online review volume, valence, quality, and usefulness that have potential impact on customer purchase decision. It is important for hotel entrepreneurs to understand the influence of communication and online information on consumer choice and the relationship between the online reviews and business performance. Thus, entrepreneurs need to pay closer attention on what is written online about their product and service (Ye, Law & Gu, 2009).