How Word-of-mouth Moderates Room Price and Hotel Stars for Online Hotel Booking an Empirical Investigation with Expedia Data

Information cues about products influence consumer purchase decisions. Online review can enhance communication among consumers while affecting consumer perception by increasing awareness and reducing uncertainty. However, little is known on how Word-of-Mouth (WOM) and information cues interact, especially on experience goods like hotel rooms. To bridge this gap, we analyze data collected from Expeida.com and use actual booking numbers to measure sales performance instead of proxy approaches employed by previous researches. This research investigates the negative effect of WOM on information cues, namely room price and hotel star rating, to hotel online sales performance. Moreover, we confirm that room price and hotel star rating can have negative and positive impacts on hotel online booking respectively. If hotels receive positive WOM, their online sales performance is less likely to be influenced by room price and star rating. However, for hotels receiving negative WOM, their online sales performance is more likely to be influenced by room price and star rating. These findings will help researchers and industry practitioners better understand the impact of online WOM in an electronic commerce context.