Online review websites, such as TripAdvisor, allow certified business owners or managers to make one managerial response to a consumer review, regardless of whether the review is positive or negative. Therefore, a business can either reinforce the positive messages conveyed in a consumer review or explain in detail what went wrong and/or what steps the management team has taken to address the issues brought up in a consumer review.

As such, managerial responses play an important role in increasing the helpfulness of an online review and have positive impacts on a business's bottom line.

But what is the right approach business owners or managers should take when posting a managerial response? Is there a strategy that works for all? Or should managers also consider what type of product/service their business offers when they respond to consumer reviews online?

The lodging industry, for instance, offers a wide range of products that tailor to different types travelers with diverse backgrounds (e.g., a luxury hotel vs. a budget travel hotel). Even though managerial responses in general can help hotels of all categories improve their financial performance, it is unclear if certain types managerial responses will work particularly well for a specific category of hotels.

With that in mind, I recently worked with two other professors — Karen Xie at University of Denver and Wei Wang at Huaqiao University in China on a research project to address the following research question: How does the effect of managerial responses on hotel performance vary across different hotel classes?

While the details of our study can be found in The Cornell Hospitality Quarterly, the highlights of our research include:

Proposed relationships for statistical analysis

The volume of managerial responses, length of managerial responses, match rate of managerial responses (i.e., matching topics between consumer reviews and managerial responses) and managerial responses from executives (e.g., general manager, president or owner) have a positive impact on a hotel's financial performance (as measured in RevPAR or revenue per available room).

The speed of managerial responses (i.e., the average number of days between the date a review is posted and the date a managerial response is received) has a negative impact on a hotel's financial performance.

Hotel class as categorized on TripAdvisor namely luxury hotels, above-average hotels with some outstanding features and a broad range of services, full-service hotels, mid-market economy hotels and budget travel hotels moderates the effect of managerial responses on a hotel's financial performance.

The data and analysis

A large-scale but granular data set was used, including 7,979 managerial responses to 51,801 online reviews for 2,652 individual hotels in 427 cities of Texas, as well as these hotels' matching financial data from 2005 Quarter 1 to 2011 Quarter 2 (26 quarters). A blend of econometric models was used in analysis.

Most proposed relationships were confirmed. Indeed, hotel class moderates the effect of managerial responses on a hotel's financial performance, suggesting that different types of hotels should adopt unique strategies in responding to online reviews.

Specific recommendations for hotels

There is no one-size-fits-all approach in responding to online reviews. Depending on the hotel's product type, managers may consider the following recommendations:

  • Budget traveler hotels — provide more but also more concise (shorter) responses by the executives.
  • Mid-market economy hotels — provide more responses by the executives.
  • Full-service hotels — provide more responses by the executives in a timely manner.
  • Above-average hotels — provide more and longer responses by the functional managers (e.g., front desk manager, sales manager, etc.) and reply in a timely manner.
  • Luxury hotels — provide more and longer responses by the functional managers.

What do you think of the above suggestions? Would you mind sharing your experience with us here?

For hoteliers, for example, what type of managerial responses seems to be more effective in helping you increase sales? For travelers, what type of managerial responses appears to be more helpful to you when you decide which hotel for your stays?