How hotel star rating moderates online word-of-mouth effect: A difference-in-difference approach

Online Word-of-mouth has become one of most important information sources when a consumer is making a purchase decision. Most researchers focus on the direct relationship between consumer reviews and sales performance rather than exploring their interaction with other factors. To bridge this gap, we conducted an empirical study in the hospitality field to investigate the impact of online consumer reviews on hotel sales and to identify any moderating effect of hotel star ratings. The data were collected from two major Chinese online travel agencies, Ctrip.com and Elong.com. Using a difference-in-difference approach with panel data, we found that consumer reviews had a significant impact on online sales, and that this effect was stronger for hotels with lower star rating. The findings will help hospitality researchers and practitioners better understand the impact of online word-of-mouth.