Iowa State University Capstones, Theses and Graduate Theses and Dissertations Dissertations 2016 An examination of online ratings on hotel performance indicators: An analysis of the Boston hotel market Suzanne Dawn Markham-Bagnera Iowa State University Follow this and additional works at: https://lib.dr.iastate.edu/etd Part of the Business Administration, Management, and Operations Commons, and the Management Sciences and Quantitative Methods Commons Recommended Citation Markham-Bagnera, Suzanne Dawn, "An examination of online ratings on hotel performance indicators: An analysis of the Boston hotel market" (2016). Graduate Theses and Dissertations. 15971. https://lib.dr.iastate.edu/etd/15971 This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected]. An examination of online ratings on hotel performance indicators: An analysis of the Boston hotel market by Suzanne D. Markham-Bagnera A dissertation submitted to the graduate faculty in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Major: Hospitality Management Program of Study Committee: Thomas R. Schrier, Major Professor Eric A. Brown Young-A Lee Anthony Townsend Tianshu Zheng Iowa State University Ames, Iowa 2016 Copyright © Suzanne D. Markham-Bagnera, 2016. All rights reserved. ii TABLE OF CONTENTS LIST OF TABLES ………………………………………………………………………. v ABSTRACT ………………………………………………………………………………vii CHAPTER 1: INTRODUCTION ………………………………………………………… 1 Purpose ……………………………………………………………………………. 1 Word-of-mouth ..………………………………………………………….. 1 Electronic word-of-mouth ………………………………………………… 2 User-Generated content …………………………………………………. 2 Online reviews …………………………………………………………….. 3 Research Objective ………………………………………………………………... 4 Research Contribution …………………………………………………………….. 5 Definition of Terms ……………………………………………………………….. 5 CHAPTER 2: LITERATURE REVIEW …………………………………………………. 8 The Hospitality Industry ……………………………………………………….…. 8 Lodging Accommodations..……………………………………………………...... 9 Hotel types ..………………………………………………………............. 10 Traveler types ..………………………………………………………......... 11 Hotel Classification Systems. …………………………………………………….. 12 Star rating ..………………………………………………………............... 13 Diamond rating…………………………………………………………….. 14 Management ………………………………………………………………………. 16 Leadership …………………………………………………..…………….. 17 Management compared to leadership……………………………….17 Revenue Management …………………………………………………………….. 18 Financial indicators ……………………………………………………….. 19 Revenue per available room (RevPar) ..…………………………… 19 Average daily rate (ADR) ..………………………………………. 20 Occupancy ..……………………………………………………….. 21 Service Industry …………………………………………………………………… 21 Service quality…………………………………………………………….. 22 Service measurement…………………………………………………….. 23 Acceptable service experience..…………………………………… 23 Customer Satisfaction …………………………………………………………….. 24 Experience..………………………………………………………………… 26 Customer satisfaction measurement..……………………………………… 27 Dissatisfaction..……………………………………………………………. 28 Hotel attributes…………………………………………………………….. 28 Value ..……………………………………………………….......... 29 Location ..………………………………………………………...... 29 Room ..……………………………………………………….......... 31 Cleanliness ..……………………………………………………….. 33 iii Service ..………………………………………………………....... 33 Staff ..………………………………………………………............ 34 Word-of-Mouth (WOM) …………………………………………………………... 34 Electronic-Word-of-Mouth (eWOM) …………………………………………… 37 Other eWOM classifications..……………………………………………… 39 Evolution of eWOM ………………………………………………………. 42 Financial impact ..………………………………………………………..... 46 Internet …………………………………………………………………………….. 47 Social Media ………………………………………………………………………. 48 Social media marketing..………………………………………………….. 51 Social media platforms..…………………………………………………… 53 Online social networks..…………………………………………………… 53 Facebook ..……………………………………………………….... 54 Commercial review sites..…………………………………………………. 55 TripAdvisor ..……………………………………………………… 56 Yelp ..………………………………………………………............ 63 Zagat ..………………………………………………………........... 64 Specific supplier travel sites..……………………………………………… 64 Content and virtual communities..………………………………………… 65 Twitter ..………………………………………………………........ 66 IgoUgo ..………………………………………………………........ 67 User-Generated Content (UGC) ………………………………………………… 67 Consumer-Generated media……………………………………………….. 69 Consumer opinion portal (COP). …………………………………………. 70 Online reviews..……………………………………………………. 70 Positive and negative reviews ..…………………………… 72 Impact of reviews..………………………………………… 73 Review-related factors..…………………………………… 75 Fraudulent reviews ..……………………………………….. 77 Trust ……………………………………………………………………………….. 79 Credibility.………………………………………………………………… 81 Homophily ..……………………………………………………….. 83 Authority ..………………………………………………………..... 84 Interestingness ..…………………………………………………… 84 Source trustworthiness ..…………………………………………… 84 Loyalty.…………………………………………………………………… 85 Purpose of This Study ..………………………………………………………........ 86 Research Questions ..………………………………………………………............. 86 Chapter Summary ..………………………………………………………............... 87 CHAPTER 3: METHODS ……………………………………………………………….. 88 Introduction………………………………………………………………………... 88 Method of Study ………………………………………………………………….. 88 Sample …………………………………………………………………………….. 88 Smith Travel Research (STR).…………………………………………….. 89 TripAdvisor.……………………………………………………………….. 90 iv Data Collection ……………………………………………………………………. 91 Research Method …………………………………………………………………. 92 Data Analysis ……………………………………………………………………… 92 Quantitative methodology.………………………………………………… 94 Chapter Summary …………………………………………………………………. 95 CHAPTER 4: RESULTS AND DISCUSSION ………………………………………….. 96 Introduction ………………………………………………………………............... 96 Data Analysis ……………………………………………………………………… 96 General summary. …………………………………………………………. 98 Yearly analysis. ……………………………………………………………. 100 Yearly summary ..………………………………………………… 107 Diamond level rankings. …………………………………………………. 108 Diamond level summary ..…………………………………………. 115 Price of hotels. …………………………………………………………….. 116 Price summary ..…………………………………………………… 128 Hotel market. ……………………………………………………………….128 Hotel summary ..…………………………………………………… 137 Size segmentation. ………………………………………………………… 138 Size summary ..……………………………………………………. 146 Operation segmentation. ………………………………………………….. 146 Operation segmentation summary …………………..……………. 153 Relational Impact to Research Questions …………………………………………. 154 Chapter Summary …………………………………………………………………. 154 CHAPTER 5: CONCLUSIONS ………………………………………………………….. 155 Introduction ………………………………………………………………………. 155 Data Description ………………………………………………………………….. 155 Discussion of Findings ……………………………………………………………. 156 General summary. …………………………………………………………. 156 Yearly analysis. ……………………………………………………………. 158 Diamond level rankings. ………………………………………………….. 161 Price of hotels. ……………………………………………………………. 166 Hotel market. ………………………………………………………………. 172 Size segmentation. ………………………………………………………… 177 Operation segmentation. ………………………………………………….. 181 Category Summary ………………………………………………………………. 184 Industry Implications ……………………………………………………………… 184 Academic Implications …………………………………………………………… 186 Limitations and Future Research ………………………………………………….. 186 Chapter Summary ..………………………………………………………............... 188 REFERENCES ……………………………………………………………………………. 189 ACKNOWLEDGEMENTS ……………………………………………………………….. 241 v LIST OF TABLES Table 1. Differences between WOM and eWOM 43 Table 2. Standardized Coefficients of the Dependent Variables for All Hotels 99 Table 3. Standardized Coefficients of the Dependent Variables for Year 2010 101 Table 4. Standardized Coefficients of the Dependent Variables for Year 2011 102 Table 5. Standardized Coefficients of the Dependent Variables for Year 2012 104 Table 6. Standardized Coefficients of the Dependent Variables for Year 2013 105 Table 7. Standardized Coefficients of the Dependent Variables for Year 2014 106 Table 8. Yearly Summary of Variable Significance 108 Table 9. Descriptive Statistics for Diamonds 109 Table 10. Standardized Coefficients of the Dependent Variables for Five-Diamonds 110 Table 11. Standardized Coefficients of the Dependent Variables for Four-Diamonds 111 Table 12. Standardized Coefficients of the Dependent Variables for Three-Diamonds 113 Table 13. Standardized Coefficients of the Dependent Variables for Two-Diamonds 114 Table 14. Diamond Summary of Variable Significance 116 Table 15. Descriptive Statistics for Price 117 Table 16. Standardized Coefficients of the Dependent Variables for Luxury Chain Price of Hotels 118 Table 17. Standardized Coefficients of the Dependent Variables for Upper Upscale Chain Price of Hotels 120 Table 18. Standardized Coefficients of the Dependent Variables for Upscale Chain Price of Hotels 121 Table 19. Standardized Coefficients of the Dependent Variables for Upper Midscale Chain Price of Hotels 123 vi Table 20. Standardized Coefficients of the Dependent Variables for Midscale Chain Price of Hotels 124 Table 21. Standardized Coefficients of the Dependent Variables for Independent Price of Hotels 126 Table 22. Price Summary of Variable Significance 127 Table 23. Descriptive Statistics for Market 129 Table 24. Standardized Coefficients of the Dependent Variables for Luxury Hotel Market 130 Table 25. Standardized Coefficients of the Dependent Variables for Upper Upscale Hotel Market 132 Table 26. Standardized Coefficients of the Dependent