The impact of online reputation on hotel profitability

Seraina C. Anagnostopoulou (Department of Banking and Financial Management, University of Piraeus, Piraeus, Greece)
Dimitrios Buhalis (Department of Tourism and Hospitality, Faculty of Management, Bournemouth University, Poole, UK)
Ioanna L. Kountouri (Department of Management Science and Technology, Athens University of Economics and Business, Athens, Greece)
Eleftherios G. Manousakis (Department of Management Science and Technology, Athens University of Economics and Business, Athens, Greece)
Andrianos E. Tsekrekos (Department of Accounting and Finance, Athens University of Economics and Business, Athens, Greece)

International Journal of Contemporary Hospitality Management

ISSN: 0959-6119

Publication date: 20 September 2019

Abstract

Purpose

The purpose of this study is to quantify the impact of online customer reputation on financial profitability.

Design/methodology/approach

Online reputation is captured by extracting the most recurring textual themes associated with customer satisfaction and dissatisfaction, expressed within positive vs negative online guest reviews on Booking.com. Latent semantic analysis is used for textual analysis. Proxies of overall financial performance are manually constructed for the sample hotels, using financial data from the Financial Analysis Made Easy (FAME) database. Ordinary least squares is used to gauge the effect of online customer reputation on financial profitability.

Findings

Empirical findings indicate that recurring textual themes from positive online reviews (in contrast to negative reviews) exhibit a higher degree of homogeneity and consensus. The themes repeated in positive, but not in negative reviews, are found to significantly associate with hotel financial performance. Results contribute to the discussion about the measurable effect of online reputation on financial performance.

Originality/value

Contemporary quantitative methods are used to extract online reputation for a sample of UK hotels and associate this reputation with bottom-line financial profitability. The relationship between online reputation, as manifested within hotel guest reviews, and the financial performance of hotels is examined. Financial profitability is the result of revenues, reduced by the costs incurred in order to be able to offer a given level of service. Previous studies have mainly focused on basic measures of performance, i.e. revenue generation, rather than bottom-line profitability. By combining online guest reviews from travel websites (Booking.com) with financial measures of enterprise performance (FAME), this study makes a meaningful contribution to the strategic management of hotel businesses.

Keywords

Citation

Anagnostopoulou, S., Buhalis, D., Kountouri, I., Manousakis, E. and Tsekrekos, A. (2019), "The impact of online reputation on hotel profitability", International Journal of Contemporary Hospitality Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJCHM-03-2019-0247

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Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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