Impacts of eWOM on Hotels from the Consumer and Company Perspective

Impacts of eWOM on Hotels from the Consumer and Company Perspective

Antoni Serra Cantallops (University of the Balearic Islands, Spain), Fabiana Salvi (University of the Balearic Islands, Spain) and José Ramón Cardona (University of the Balearic Islands, Spain)
DOI: 10.4018/978-1-4666-9787-4.ch143
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Advances in information technology and the introduction of new methods of communication have led to increasingly significant changes in consumer behavior. These changes have produced a shift in focus in the companies’ marketing strategies and business administration. If one sector has to be identified as being strongly affected by the widespread surge of Internet use, this one is the travel and tourism industry and, particularly, the hotel industry.

Purchase decision processes are composed of several variables that influence consumer choice for certain products and services. Customers might choose a hotel based on its location (for instance, close to an airport, tourist location, or downtown), brand name, various facilities (such as swimming pool, golf course, and spa and fitness center), service quality, price, loyalty program, and quality ratings by past guests. Any or all of these would enter into the customer choice mix (Verma, 2010). Atmosphere and design could be added to the set of variables.

But, obviously, hotel reputation also plays a significant role when the consumer has to make a selection. One of the factors evaluated in the consumer decision-making process is Word-of-Mouth (WOM), defined by Harrison-Walker (2001) as “informal, person-to-person communication between a perceived noncommercial communicator and a receiver regarding a brand, a product, an organization, or a service.” Dick and Basu (1994) define WOM as “a volitional postpurchase communication by consumers.” Most of the studies analyze WOM as a factor that, to a greater or lesser degree, influences consumers in choosing products and services. Yoon and Uysal (2005) consider that WOM “is one of the most often sought sources of information for people interested in travelling.”

Electronic Word-of-Mouth (eWOM), also often referred to as online reviews, online recommendations, or online opinions, has gained importance with the emergence of new technology tools. Litvin et al. (2008) define eWOM as “all informal communications directed at consumers through Internet-based technology related to the usage or characteristics of particular goods and services, or their sellers.” They add that this includes communication between producers and consumers as well as those between consumers themselves. Their typology is two-dimensional: a) communication scope: from one to one (emails), one to many (review sites) or many to many (virtual communities); and b) level of interactivity: from asynchronous (emails, review sites, blogs) to synchronous (chatrooms, newsgroups, instant messaging). Additionally, electronic Word-of-Mouth has been shown to be a powerful influence on whether or not to select a brand (Casaló et al., 2010). Worthington et al. 2010 adds that consumers who are highly loyal are likely to engage in positive word-of-mouth for the brand and act as brand advocates.

The main differences between WOM and eWOM can be identified in the reach of the reviews’ impact (number of people who can be influenced) and the speed of interaction. With regard to this comparison, Sun et al. (2006) conclude that “compared to traditional WOM, online WOM is more influential due to its speed, convenience, one-to-many reach, and its absence of face-to-face human pressure.” Schiffman and Kanuk (2000) describe additional reasons for consumer attention to WOM and eWOM as follows: “The expectation of receiving information that may decrease decision time and effort and/or contribute to the achievement of a more satisfying decision outcome.” This breadth of eWOM scope and ease in accessing reviews can deeply affect a company’s performance. Therefore, companies are increasingly seeking to understand the factors that influence the use of eWOM, as well as the impacts resulting from its use.

Key Terms in this Chapter

Information Technology: The application of telecommunications equipment to store, retrieve, transmit and manipulate data.

Consumer: Person or organization who acquires goods and services for his or her own needs.

Word-of-Mouth: Informal and person-to-person communication between a perceived noncommercial communicator and a receiver regarding a brand, a product, an organization, or a service.

Reputation: Notoriety or fame of something.

Review: Critical assessment of something.

Social media: Telecommunications tools that allow people to create, share or exchange information, ideas, etc. in virtual networks.

Hotel: Building that offers a temporary place to stay for travelers.

Company: Business enterprise.

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