Daily online review sentiment and hotel performance

Abstract

PurposeThis paper aims to investigate the links between daily review sentiment and the hotel performance measures of occupancy rate (OR), average daily rate (ADR) and revenue per available room (RevPAR).Design/methodology/approachThe authors conducted review sentiment analyses in three moments (−1, −7 and −14 days) before arrival time using a data set of budget hotel performance and online reviews. The aim was to identify the effect of review sentiment in the budget hotel market on the three performance metrics.FindingsDaily sentiment positively affects ADR and negatively affects OR and RevPAR, but only up to a certain threshold, after which the trend reverses. Prices increase with the level of sentiment, and high prices lead to low OR and RevPAR only when the sentiment scores are low. When they are high, they are associated with low rates, which lead to high OR and RevPAR.Research limitations/implicationsDaily review sentiment can be viewed as a valuable “barometer” indicating a hotel’s daily operational effectiveness. Daily sentiment can thus allow hotel managers to adjust their dynamic pricing strategies more accurately.Originality/valueThis study identifies daily sentiment as an alternative predictor of hotel performance. In addition to the roles of valence and volume in the decision-making process, the authors found that daily review sentiment can be an “in-the-moment” factor with a high impact, encouraging consumers to complete their transactions. This study suggests that aggregated measures such as the total number of reviews and overall ratings of the hotel should not be the sole consideration in reputation management.