Online Negative Reviews in the Hospitality Industry: Moving from problems to Opportunities

Ani SADAGHASHVILI1 and Ricardo Fontes CORREIA2

1Master of International Marketing – ISM University of Management and Economics,Vilnius, Lithuania

2Unidade de Investigação Aplicada em Gestão (UNIAG) – UNIAG, R&D unit funded by the FCT – Portuguese Foundation for the Development of Science and Technology, Ministry of Science, Technology and Higher Education Project Code Reference UID/GES/4752/2016, Bragança, Portugal

Academic Editor: Alexandra Ioanid

Cite this Article as:

Ani SADAGHASHVILI and Ricardo Fontes CORREIA (2019), “Online Negative Reviews in the Hospitality Industry: Moving from problems to opportunities ", Journal of Marketing Research and Case Studies, Vol. 2019 (2019), Article ID 126255, DOI: 10.5171/2019.126255

Copyright © 2019. Ani SADAGHASHVILI and Ricardo Fontes CORREIA. Distributed under Creative Commons CC-BY 4.0

Abstract

The aim of this research is to understand better the dynamics of online negative reviews. Particularly, we want to explore the relationship between service recovery online and customer satisfaction in the hospitality industry. Based on the concepts of service failure, service recovery, and satisfaction, a conceptual model was developed. The conceptual model intends to measure the relationship between online service recovery and customer satisfaction. An empirical quantitative research was used to test the model, with a sample of international travellers who had written an online negative review and received responses on it. This research concludes some practical insights that are believed to be very useful for hotel management in applying service recovery correctly when responding to dissatisfied customers’ online reviews on travel related platforms.

Keywords: Keywords: customer satisfaction, service failure, service recovery, online reviews

Introduction

Two decades ago, comments were not usually considered before booking a Hotel. During this last 20 years, a complete change happened. Nowadays, travel related online platforms like booking.com and TripAdvisor are the routine for travellers. “One of the most powerful brand conversations is online consumer reviews and/or electronic word of mouth (eWOM), and not surprisingly, the number and type of reviews sites have exploded in recent years” (Rose & Blodgett, 2016, p1).

“Hospitality organizations worldwide, both big and small, are competing intensively to acquire good reviews on TripAdvisor and other social media sites in order to attract more consumers” (Chen & Tabari, 2017, p53). To have a good reputation on online platforms is a great way to show travellers the quality of the hotel and attract them without much effort, but on the other hand, negative reviews attracts more attention than positive ones (Fernandes & Fernandes, 2017). “Studies indicated that the impact of negative online reviews is more pronounced for services, such as hotels, when compared with tangible goods” (Rose & Blodgett, 2016, p2). Negative reviews are decreasing the reputation level of the hotel and the demand of consumers is decreasing as well (Rose & Blodgett, 2016). Having a good reputation on online platforms is one of the priorities for the hotel industry, as reviews have a direct correlation with demand (Weisstein, Song, Anderson & Zhu, 2017. Mayer. 2015). Negative reviews are written by unsatisfied customers and their dissatisfaction is caused by service failure, but not only unsatisfied customers write negative online reviews. We can consider also customers who are shy to complain on place but want to voice their opinions (Fernandes & Fernandes, 2017), the ones who want to share their negative experience to other travellers, travellers who want to give feedback to hotels about a negative experience and travellers who want to get some kind of compensation (Fernandes & Fernandes, 2017).

“A key issue for service providers is whether they should respond to negative online reviews” (Rose & Blodgett, 2016, p2). In 2017, the study of Ho in achieving service recovery through responding to negative online reviews suggested that “hotel management should give each negative review a timely and effective response” (Ho, 2017, p32). However, just few hotels actively respond to negative reviews (Rose & Blodgett, 2016).

There are many researches about service recovery and hospitality industry, but not about how responding online to negative reviews by using service recovery (Fernandes & Fernandes, 2017, p2). The aim of this research is to understand better the dynamics of online negative reviews. Particularly, we want to explore the relationship between online service recovery and customer satisfaction in the hospitality industry.

This paper is divided into five sections. Firstly, in the literature review, we address concepts like service failure, service recovery and satisfaction. Secondly, we describe and justify the methodology used in this research. Then we present the analytical model to explore the relationship between online service recovery and customer satisfaction based upon the theoretical approach detailed in section one. It follows the empirical analysis. The last section presents the conclusions and management recommendations as well as suggestions for further research.

Literature Review

According to WTTC 2017, tourism and travel has become the world’s largest industry. In parallel, the “hospitality industry is bigger, richer and constantly changing. It is growing tremendously.” (Sabina, 2017, p1). Simultaneously, in a time where the new media and communication platforms keep emerging in an astonishing pace “hospitality industry is particularly vulnerable since the decision process is increasingly influenced by online reviews” (Fernandes & Fernandes, 2017, p1) which are written on travel related online platforms like booking.com and TripAdvisor. Based on data from the TripAdvisor for 2015, 250 million offered reviews and the site receives some 375 million visits per month. On the site, travellers are sharing reviews with each other. Hotel industry is also focused to get feedbacks from consumers to make improvements in their operations on competitive market and on profitability (Han, Goh, Mankad  & Gavirnen, 2016). The easiest way to get consumers feedbacks is online reviews on social networks. Social media is one of the most important factors in the hospitality industry. On travel related online platforms, consumers can find wide range of information about hotels in worldwide and it also helps hotels to realize customer’s needs and to make them more engaged (Chen & Tabari, 2017.Bilbil, 2017).

Service Failure

More than ever the hospitality industry is trying to avoid service failures, but sometimes they happen. In 2014, Christian Ennew explained service failure as a process where “consumers experience dissatisfaction because the service was not delivered as originally planned or expected” (Ennew, 2014, p.2). We can also consider a magnitude of service failure, as the higher the level of failure, the much effort the company needs to put in the service recovery process (Palmer, 2014).

Customers who have experience in service failure can react in a variety of ways, (illustrated on Figure 1). It is believed that service failure can arise customer dissatisfaction, and the dissatisfaction is causing negative feelings such as anger, discontent, disappointment, self-pity, anxiety, and regret. After recovering these kinds of negative emotions which are caused by service failure, customers are judging the recovery process and after making judgment they decide whether to come back or not to the service provider company again. (Zeithaml, Bitner & Gremler, 2013).

Service Recovery

Service recovery is known as a strategy which involves actions taken by service providers to respond to service failure (Mattila, 2001). All the companies who are providing services have experienced failures and most of them “learned the importance of providing excellent recovery for disappointed customers (Zeithaml, Bitner & Gremler, 2013, p188). Effective and good service recovery can turn angry and frustrated consumers into loyal ones (Palmer, 2014).

 

Figure 1: Customer complaint actions following service failure

Source: Zeithaml, Bitner. & Gremler (2013, p186)

Also Zeithaml, Bitner and Gremler (2103) defined that excellent service recovery strategy combines two general types of strategies, first is “fix the customer” and second is“fix the problem”. “When service failure occurs, people expect to be adequately compensated in a fair manner. However, studies show that many customers feel that neither they have been treated fairly nor received adequate recompenses (Lovelock & Wirtz, 2007, p394). “Stephen Tax and Stephen Brown found that as much as 85% of the variation in the satisfaction with a service recovery was determined by three dimensions of fairness” (Lovelock & Wirtz, 2016, p510), (illustrated on Figure 2). First is procedural justice, and it includes flexible system of service recovery process. Second is interactional justice, in this part of the process, first of all, employees should explain to the dissatisfied customer why the failure was occurred; also in the process, they should be polite and honest. The third one is outcome justice and it is used when the company is providing compensation to customers for the service failure (Lovelock & Wirtz, 2016).

Figure 2:  Justice Dimensions of the service recovery process

Source: Lovelock & Wirtz (2016, p510)

In 2006, Kau and Loh also stated three dimensions of perceived justice. The first is distributive where company offers compensation for the service failure by: discounts, free gifts, economic refunds, apology and many others. The second one is procedural justice where the most important factors are the control of the recovery process (speed, flexibility) and the type of negotiation between employee and customer. The third one is interactional justice, this justice is about interpersonal fairness and it includes explanation for the service failure, honest, politeness and effort from the employee in service recovery process (Kau & Loh, 2006). “In service recovery, customers evaluate justice from these three dimensions that relate to fairness of interactional treatment provided by the service personnel, fairness of the policies and procedures implemented by the company and fairness of the redress offered” (Sengupta, Ray, Trendel & Van Vaerenbergh, 2018, p6).

To measure service recovery, we will adopt the concept of perceived justice including apology, compensation and explanation.

Apology

Apology is defined as “a communication or gesture whereby offenders, at a minimum, acknowledge their wrongdoing and responsibility and express remorse” (Wenzel, Lawrence-Wood, Okimoto & Hornsey, 2017, p2). Apology can be provided in two ways; face to face and publicly on social media. When it is face to face, apology has bigger value for consumers when it is provided by high-status personnel than an apology provided by low-status personnel, but in an online context, some researches have shown that who is delivering apology for a service failure is ignored (Sengupta, Ray, Trendel & Van Vaerenbergh, 2018). “Many studies obtained that complaining customers who receive an apology are more satisfied than customers who receive no apology” Sengupta, Ray, Trendel & Van Vaerenbergh, 2018, p6). As it has been mentioned in service recovery part, apology is a part of distributive justice and it is an important player in the service recovery process.

Compensation

“Compensation refers to the monetary payment offered to the customer to rectify inconveniences suffered during the service failure” (Nwokorie, 2016, p3). We have two types of compensation: financial and non-financial. In hotel industry, financial compensation can be a refund of money, a refund can be some percentage of payment or the whole amount of accommodation or for some services provided by the hotel discount cards for future stay. Non-financial refund can be free gifts and free vouchers for some services which the hotel is implementing. Customers who have experiences in service failure process are expecting from service provider companies some kind of service recovery process, and one option of their expectation is compensation (Nwokorie, 2016). According to the research of Kim in 2007, compensation has an effect on customer satisfaction and “the effect of compensation in service recovery strategy is very important” (Kim, 2007, p84). Compensation is also part of the distributive justice and a useful tool in service recovery processes.

Explanation

As apology and compensation, explanation is also an option of service recovery. Some researches have “founded that individuals have a normative expectation to receive an explanation following a breakdown in service” (Bradley & Sparks, 2012). When service failure is happening, consumers have a desire to receive an explanation of what went wrong and why a service failure happened (Bradley & Sparks, 2012). We can consider four types of explanation: the first is “excuses – those that invoke mitigating circumstances in order to absolve the service organization of the responsibility for the adverse outcome”. The second type is “justifications – those that involve admission of responsibility, but which legitimize the service organization’s actions on the basis of shared needs and/or higher goals”.  The third type is “referential or reframing accounts – those that seek to minimize the perceived unfavorability of the failure by invoking downward comparisons”, and the forth one is “apologies – those involving an admission of the failure and an expression of remorse” (Bradley & Sparks, 2012, p41). Nowadays “the use of explanation is a common, low-cost, yet under-researched strategy for recovering from service failure” (Bradley & Sparks, 2009, p25). Providing explanation for the service failure can diminish dissatisfaction and create a memorable experience for dissatisfied customer which can foster satisfaction (Tarofder,, Nikhashemi, Azam, Selvantharan & Haque, 2016). Explanation has been mentioned in the service recovery part, that it is part of the interactional justice and it is also used in the service recovery process.

Time

Time is also an important ingredient in the service recovery process, “some researches define time in service recovery as the time required to respond to a complaint” (Hogreve, Bilstein & Mandl, 2017, p5) and recovery time is also very important for customers, 60 % of customers identify lost time as the greatest harm they suffer during service recovery (Hogreve, Bilstein & Mandl, 2017). Customers who are complaining want to get timely response, for quick response, employees should be empowered and well trained, some researchers observed that more than half of customers are more satisfied when they get response immediately or within 24 hours (Zeithaml, Bitner & Gremler, 2013). Time has also been mentioned in the service recovery part, that it is part of the procedural justice and it is also used in the service recovery process.

Consumer Satisfaction and Dissatisfaction

Consumer dissatisfaction can be explained as a negative difference between what the consumers expect from a product or service and what they perceive or get (Wikstrom, 2018). Consumer dissatisfaction has direct relationship with consumer complaint behavior and it causes negative word of mouth (Mahapatra, 2014). “It is believed that 96 percent of dissatisfied customers never complain; 60 to 90 percent of these “silent” dissatisfied customers will not buy from you again (Aaker, Kumar & Day, 2001, p674).

Consumer satisfaction has been researched in many cases, and “the concept of consumer satisfaction refers to the degree of meeting or exceeding consumer needs and expectations by receiving a service either product” (Naderian & Baharun, 2015, p14). Service industry organizations are “now realizing that customer satisfaction through the delivery of service quality is a key component to overall success and satisfaction” (Crawford & Riscinto-Kozub, 2011, p36). In both cases either when the consumer is satisfied or dissatisfied, we can get electronic word of mouth.

Consumers who are writing negative reviews are the ones who did not complain on the place, or who have complained on the place about service failure, but are still dissatisfied with service recovery, consumers who are emotionally angry about some factors during their staying period or consumers who want to help hotel management to make improvements in some parts of service. There are also consumers who are writing online negative reviews to get revenge, “especially when they feel betrayed by the firm and/or feel helpless to change the situation in which they find themselves” (Obeidat, Xiao, Iyer & Nicholson, 2017, p496) and consumers who are shy to complain on place but they want to voice their opinions (Fernandes & Fernandes, 2017). Hotels should try to avoid these types of consumers who are writing online negative reviews, because they have big power on online platforms; they can damage reputation of the hotel and they can decrease the number of demand.

Online Reviews and How to Respond To Online Negative Review

For hotels, online reviews are one of the most important factors and hotel management should pay attention to both positive and negative comments. With positive reviews, hotels are keeping good reputation on online platforms; and with good reputation, it is easier to attract customers and increase the number of bookings. Also positive reviews are creating trust, which is “highly beneficial for the market” (Rose & Blodgett, 2016, p396). Negative reviews are damaging hotel reputation and decreasing the demand (Ho, 2017. Mayer, 2015). Online reviews are not only to keep good reputation on online platforms and attract more consumers; it also helps hotel management to find out their strong and weak parts to make improvements (Berezina, Bilghan, Cobanougl & Okumus, 2015).

In 2013, Teresa Trevino introduced three types of responses on online negative reviews: First the denying response; where hotel management is disagreeing with the unsatisfied consumer about service failure and arguing with the consumer that he/she is not true. Second is the accepting respond; where management politely recognizes the situation which has caused consumer dissatisfaction and politely explaining the situation, but not promising to make improvements in the future and the third one is the changing respond; where hotel management is apologizing politely and promising consumer to improve the failure for future visit. (Trevino, 2013).

Methodology

The main goal of this study is to find out the best ways of using service recovery to respond to online negative reviews putting in evidence the factors that have influence on consumer satisfaction.

We follow a non-experimental quantitative research to measure the relationship between service recovery and consumer satisfaction.

The sample for the survey was obtained from travellers who had written negative reviews for hotels and got answers on it. The research instrument was developed with structured questionnaire; including screening, control and seven point Likert scale questions. The questionnaire was posted on social media, particularly on travel related Facebook groups, where members are sharing their experiences, asking questions and discussing travel related issues from 16th till 19th of April 2018. 178 responses were collected form an online survey. From this number, we eliminate 36 due to screening questions, and 37 responses were eliminated because they were incomplete; resulting in 105 responses that were used in our analysis.

Conceptual Model

Figure 3 presents the conceptual model developed according to the background of the literature review. We have defined three independent variables, which are: apology, compensation and explanation. The dependent variable is consumer satisfaction; and we defined time as a moderation variable.

Figure 3: Conceptual model

Apology – will be measured by distributive justice, as distributive justice is used in service recovery.

Compensation – can also be measured by distributive justice.

Explanation – will be measured by interactional justice, interactional justice is also used in service recovery processes.

Time – will be measured by procedural justice and procedural justice is also used in service recovery processes.

Consumer Satisfaction – according to Gordon and Bruner, to measure satisfaction, the most relevant type of measurement is seven point Likert scale (Gordon & Bruner, 2016).

The Hypotheses were developed according to the main theoretical insights that resulted from the literature review and the conceptual model and they had a fundamental role exploring the relationships between variables.

H1: Response with apology positively affects customer satisfaction.

H2: Response with compensation positively affects customer satisfaction.

H3: Response with explanation of service failure positively affects customer satisfaction.

H4: The relationship between apology and customer satisfaction is moderated by time,

which means that if customers receive a timely response, the effectiveness of apology on satisfaction increases, but if customers do not receive a timely response, the effectiveness of apology on satisfaction decreases.

H5: The relationship between compensation and customer satisfaction is moderated by time, which means that if customers receive a timely response, the effectiveness of compensation on satisfaction increases, but if customers do not receive a timely response, the effectiveness of compensation on satisfaction decreases.

H6: The relationship between explanation of service failure and customer satisfaction is moderated by time, which means that if customers receive a timely response, the effectiveness of explanation of service failure on satisfaction increases, but if customers do not receive a timely response, the effectiveness of explanation of the service failure on satisfaction decreases.

Empirical Analysis

We used a regression analysis to determine the relationship between the variables under consideration. On table 1, the relationship between dependent (customer satisfaction) and independent (apology, compensation and explanation) variables is illustrated. This regression analysis helped us to test first, second and third hypotheses.

Table 1:  Regression analysis results

From table 1, the value of 0,69 for the R square is resulted which is a good value regarding the quality of the regression analysis. It also results from the table above that the first independent variable (apology) (0,001) has high significant effect on customer satisfaction and according to B coefficient of apology (B=0.28), it has a positive effect on customer satisfaction, meaning that it will increase by 0,28, if apology increases by one point on the scale. Thus, H1 is confirmed.

The second independent variable (compensation) is not significant as it has a coefficient of significance of 0,64 (more than 0,05) according to B coefficient of compensation (B=-0,03), customer satisfaction will decrease by 0,03, if compensation increases by one point on the scale. H2: is rejected.

The third independent variable (explanation) has the highest significance effect on customer satisfaction (sig: 0,000), and according to B coefficient of explanation (B=0.42), it has the highest positive effect on customer satisfaction, it means that customer satisfaction will increase by 0,42, if explanation of the service failure increases by one point on scale. H3: Response with explanation of service failure positively affects customer satisfaction, is confirmed.

Moderation Analysis

Moderation analysis helped us to test fourth, fifth and sixth hypotheses. On table 2, it is possible to confirm whether the relationship between the dependent variable (customer satisfaction) and the independent variable (apology) is moderated by the moderation variable (time). From table 2, we need to verify if the moderation effect is significant, for that, it is necessary to check the confidence level limits where LLCI is the lower value of the range confidence interval and ULCI is the upper value of the range, and there shouldn’t be the 0 value between confidence lower and upper values.

Table 2: Moderation test for customer satisfaction and apology

According to Table 2 above, moderation effect is not significant because LLCI is -0,0391 and ULCI is 0,0779, it means that 0 is between this range of values. H4 is rejected and the moderation variable (time) does not have any effect on the relationship between apology and customer satisfaction.

On table 3, we can check if moderation variable (time) has an effect on the relationship between customer satisfaction and compensation.

Table 3: Moderation test for customer satisfaction and compensation

 

According to table 3, moderation effect is not significant, LLCI is -0,0568 and ULCI is 0,0307, zero is between this range, so moderation variable (time) does not have any effect on the relationship between compensation and customer satisfaction. H5 is rejected.

On table 4 below, we can check if moderation variable (time) has an effect on the relationship between customer satisfaction and explanation.

According to table 4, moderation effect is not significant, LLCI is -0,0400 and ULCI is 0,0648, zero is again between this range, so moderation variable (time) does not have any effect on the relationship between explanation and customer satisfaction. H6: is also rejected.

Table 4: Moderation test for customer satisfaction and explanation

Note: Compiled by the author

Table 5 below illustrates the summary of hypotheses test results, as previously mentioned from six hypotheses, only two hypotheses were confirmed.

Table 5: Summary of hypothesis test results

Practical Implications

This study is a first step in connecting online reviews and service recovery, and hence, it has some limitations that need to be recognized when interpreting its findings. The main limitation for the research was to find out the correct sample of respondents; it was very challenging to find respondents who had written online negative reviews and got responses on them.

This research has resulted useful insights that hotel managers can employ in order to understand the best ways of using service recovery to respond to online negative reviews. To have an effective response, hotel management should use service recovery instruments and they should be aware that the strategies used on the service recovery on place are different from the service recoveries that should be applied online. For example: on place, the compensation is used to recover complaint of the customer which leads to increase the satisfaction of the customers. However, when the compensation is provided online, the customer’s dissatisfaction is not changing. It  has also been proven on empirical research that an effective response should include the apology for the service failure, plus the explanation why the service failure occurred. This kind of response will help hotel management to turn dissatisfied customers into satisfied ones.

In future researches, we would like to explore different ways of using service recovery to respond to online negative reviews, for example, a response with a promise to fix the service failure for future visit and a response with a request for future patronage.

We can Also suggest making experimental empirical research and using personal appeal as a moderator variable to find out, if it can cause positive effect on the relationship between service recovery and customer satisfaction.

 

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