Positive Feedback From Customer Reviews: The Self-enhancement Effect

Proper pricing strategy is a key component in hotel revenue maximization but determining the right room rate is not an easy task. Although many advanced revenue management systems have been introduced for hoteliers to optimize room rates and inventory allocation based on expected demand, hoteliers keep adjusting their expectations and pricing based on various external factors. Using the theory of performance feedback, this study attempts to analyze the role of positive customer review feedback on hoteliers’ pricing decisions in cases where hoteliers find that their actual financial performance is lower than expectation. The quantitative analysis of 63,492 US properties in monthly observations found that positive customer reviews moderate the relationship between negative RevPAR performance feedback and pricing decisions. The findings of this study add valuable insights to the debate regarding the role of customer reviews in the hospitality industry.