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Financial Implications of Customer Engagement Behavior on Business Profitability

Abstract
This study investigated the financial value of online reviews, an important customer engagement behavior (CEB). Total revenue, operating expenses and operating profits of a given period from each property were collected for 111 hotels in five Asian countries. These were matched with each hotel’s TripAdvisor reviews for the same time period, yielding a sample of 53,474 reviews. Panel regression analysis showed that review variance, volume and length had varying levels of association with gross operating profit indicators, thus providing empirical evidence linking CEB and business profitability. In comparison, only review volume was significantly associated with a hotel’s total revenue. Meanwhile, review valence is not significantly related with all measures of total revenue, total expenses and operating profits. The reviews were also assessed for their relationship with room revenue for comparisons with profitability and total revenue indicators. Theoretical and empirical implications of the study were discussed.
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event
Date
2020
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