Measuring the Value of Managerial Responses to Online Reviews - A Natural Experiment of Two Online Travel Agencies
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TL;DR
It is found that managerial responses have a significant impact on hotel bookings, and a hotel that provides managerial responses receives 60% more online bookings than an equivalent hotel without managerial responses.
Abstract
This study assesses the influence of managerial responses to online customer reviews on product sales. We leverage a natural experiment provided by two online travel agencies. Both agents allow customers to post reviews on hotels, but only one of the travel agents allows hotel management to post managerial responses. Using a difference-in-difference approach, we find that managerial responses have a significant impact on hotel bookings. A hotel that provides managerial responses receives 60% more online bookings than an equivalent hotel without managerial responses. Our result highlights the importance of managing and responding to online customer reviews.