BOCA RATON, Fla. (Nov. 12, 2020) – Operators of hotels and short-term rental properties looking to build back business hampered by the coronavirus pandemic shouldn’t worry about low prices as much as customer opinions, according to a new study by researchers at Florida Atlantic University and four other universities.
When booking hotels and so-called peer-to-peer accommodations such as Airbnb, travelers are swayed more by customer reviews than complex discount strategies, the study found. Travelers selecting hotels tend to rely on the percentage of positive reviews, while the number of online reviews means more to people choosing Airbnb-type properties.
The study, published in the journal Internet Research, was conducted by FAU’s Anil Bilgihan, Ph.D.; Fevzi Okumus, Ph.D., of the University of Central Florida; Ying Bao, Ph.D., of the University of International Business and Economics in Beijing; Xusen Cheng, Ph.D., of Renmin University of China in Beijing; and Shixuan Fu, Ph.D., of Beijing International Studies University.
The findings show that operators must improve their marketing strategies and perfect management capabilities, particularly as the tourist season looms, the researchers said. Hospitality is the largest private employer in Florida with more than 1.1 million people working in the industry, which was decimated by the pandemic.
“Usually, hotel rooms are price elastic, meaning that the demand for the rooms will increase if you reduce the price,” said Bilgihan, an associate professor in FAU’s Marketing department within FAU’s College of Business. “However, we found that people believe they are reducing the risk by reading the comments of other consumers. Ultimately, they are willing to pay more if they know they are booking a property that has the approval of previous guests.”
The emergence of Airbnb and similar platforms gives consumers a nearly unlimited variety of choices, but when it “comes to booking a place to stay for their trip, however, travelers are faced with an overwhelming number of trade-offs, resulting in choice overload during the decision-making process,” according to the study.
The researchers conducted an experiment involving 335 respondents and their reactions to hypothetical alternate scenarios.
The findings about price underscore a strategy suggested by Peter Ricci, Ed.D, director of FAU’s Hospitality and Tourism Management program.
Ricci insists deep price discounts will set a bad precedent for hoteliers after the pandemic ends. Hotels should avoid slashing prices and instead offer value through services and amenities, such as free face masks and hand sanitizer, to stand out from the competition, he said.
