Understanding the Effect of User-generated Content on Hotel Performance in Auckland

With the increasing use of Web 2.0 applications, user-generated content (UGC) has gained importance in the development of the tourism and hospitality industry. UGC, as part of many travel review sites, provides information regarding not just the tourism-related products in question, but also aspects of the individual post-consumption experience. Hence, the UGCs provided by purchasers have become a main source of information on product quality for both the tourism industry and its consumers. An increasing number of contemporary consumers consult UGC, including online reviews, before making purchasing decisions, therefore playing an important role in their decision making processes. The accommodation sector, particularly, has a central place within the travel industry and is an important contributor to the tourism economy. At the same time, the traditional hospitality sector operates in a competitive environment and is now becoming vulnerable due to a growth in the number of hotel room reservations being made via the internet and recent disruptive alternative accommodation types. Furthermore, the accommodation decision process is increasingly influenced by online comments of hotel guests’ experiences in a particular hotel facility. Therefore, as for the hotel performance, UGC is rapidly gaining traction as part of the hotel room purchase decision making process. The aim of this study was to analyse the effect of UGC on the hospitality industry, specifically with regard to hotel room sales, while also attempting to understand the accommodation attributes influencing customer satisfaction. By adopting secondary data from Booking.com in the form of review scores and qualitative comments, this dissertation attempted to understand the importance of different service attributes towards hotel performance in Auckland, New Zealand. Specifically, the influential factors of hotel service were studied in order to understand the influential elements of customer satisfaction, their contribution to a general hotel satisfaction score and its effect on hotel performance. By utilising post-positivism as the research paradigm, this study adopted a mixed-method approach. A quantitative methodology was combined with a thematic analysis to analyse the significance between hotel performance and UGC in the form of hotel ratings and qualitative comments. A sample of 89 star-rated hotels within Auckland’s central business district (CBD) was selected and both independent and dependent variables regarding influential elements of the hotel service were identified and collected in the first quantitative stage. For the second qualitative stage, thematic analysis was employed to study 100 online reviews of 10 purposely selected hotels. The additional amenities that were not considered within the quantitative scores were discovered in order to provide better quality service and improve hotel performance. The relationship between different hotel attributes and hotel performance were analysed quantitatively and confirmed the significance of value for money and location. The ANOVA test examined the effect of star classification on overall scores and concluded that cleanliness, comfort, facilities, staff service and other measurable variables like free Wi-Fi and location were significantly lower for 2 to 3.5 star hotels when compared to 4 star and above, according to Bonferroni’s test. A multivariate regression analysis compared effects on review numbers – as a proxy for room bookings – as well as price levels. Value for money seemed the most significant indicator to positively influence review numbers (specifically so for luxury hotels), as well as negatively correlating with the price per night for a double room. Hotels charging a lower price per night for a double room were found to offer better value for money. Having better levels of cleanliness, comfort and facilities and a good location were more likely to increase the price level for a room. As the finding suggests, higher price level hotels might offer customers accommodation in a prime location and with high levels of cleanliness and facilities, while conversely lower value hotels focus primarily on the price proposition. Cleanliness, comfort and facilities only positively influenced review numbers for budget hotels, possibly indicating that this is a hygiene factor in the luxury segment that is seen as a minimum requirement, and not so much a competitive advantage. A similar observation could be made for Free Wi-Fi. The thematic analysis of the reviews confirmed the general importance of 7 independent hotel attributes. The category of location and room facilities received a relatively great number of positive feedback, whereas significant negative feedback related to the category of value for money, with a significant number of reviews mentioning the over-priced situation of hotel price within Auckland CBD