Do lower costs necessarily induce higher value ratings? An analysis of online hotel reviews

Abstract

ABSTRACT Combining online reviews and secondary data, this study integrates transaction costs and travel costs to examine factors shaping travellers’ perceived value of hotel stays with a focus on the moderation effects of traveller and travel characteristics. Results of a mixed-effect ordered logit model reveal negative effects of transaction costs and travel costs, and these effects vary depending on travellers’ experience quality, expertise level, and travel mode. Particularly, travellers with higher experience quality are sensitive to transaction and travel costs when rating the value of hotel stays. Visitors travelling as a couple and on business are most sensitive to transaction costs, whereas those travelling with family and friends consider travel costs a critical factor. Travellers’ sensitivity to transaction costs also intensifies as reviewer expertise increases; by contrast, only travellers with limited and moderate expertise are sensitive to travel costs. Finally, implications for hotel marketing and revenue management are discussed.