Online review response strategy and its effects on competitive performance

Online reviews have transformed consumer behavior in information searching and sharing. Their growing popularity has enabled new differentiation strategies for lodging operators. More subtly, online review systems have forced hotel managers to compete through the effective use of information systems that they have not created or purchased. Therefore, managers in the tourism industry must adapt to the widespread use of external systems, incorporate them in their strategy and evaluate their effects. This study focuses on the impact of managements' quantity and quality of usage of online review systems. Our findings show that managerial response quantity positively impacts hotels’ competitive performance. Moreover, responses have a stronger positive impact when they address extreme reviews. We evaluate four response strategies and find significant performance differences among them. Our finding demonstrates the importance of proficiency in external information systems use because performance differs by “how” the system is used – not only “how much.”