ONLINE BOOKING SYSTEM

Online Booking System



Abstract

The increasing use of web 2.0 applications has generated numerous online user reviews. Prior studies have revealed the influence of user-generated reviews on the sales of products such as CDs, books, and movies. However, the influence of online user-generated reviews in the tourism industry is still largely unknown both to tourism researchers and practitioners. To bridge this knowledge gap in tourism management, we conducted an empirical study to identify the impact of online user-generated reviews on business performance using data extracted from a major online travel agency in China. The empirical findings show that traveler reviews have a significant impact on online sales, with a 10 percent increase in traveler review ratings boosting online bookings by more than five percent. Our results highlight the importance of online user-generated reviews to business performance in tourism.

Online Booking System

1. Introduction

The rapid growth of web 2.0 applications, which empower Internet users and allow two-way information communications in travel and tourism, has generated an enormous number of online user-generated contents (UGC) on hotels, travel destinations, and travel services (Sigala, 2008). At the same time, an increasing number of travelers are using the Internet for travel planning ( [Litvin et al., 2008] and [Sigala et al., 2001] ). Results of large-scale surveys have shown that searching for travel-related information is one of the most popular online activities (Pew Internet and American Life Project, 2006). In addition, Complete, Inc (2007) found one-third of travel purchasers visited a message board, forum, or online community before their online travel purchasing because they believed online reviews would be helpful to their purchase decision. Forrester Research (2006) estimated that 34.7 percent of total online spending is related to travel, and a recent survey indicated that more than 74 percent of travelers use the comments of other consumers as information sources when planning trips for pleasure (Gretzel & Yoo, 2008).

The aim of the study was to identify the impact of online word-of-mouth on sales in the tourism and hotel industries. We tested the influence of the valence and variance of online consumer-generated reviews based on the number of online bookings for the hotels included in this study. Our work was designed to extend current research on the effect of online consumer-generated reviews to encompass experience goods in tourism. The study also makes a methodological contribution to tourism research by validating the proxy for the number of online bookings using empirical data.

The rest of this paper is organized as follows. In Section 2, we provide a review of previous studies and the proposed hypotheses. We then describe the research model and data in Section 3. The results are reported in Section 4. Section 5 assesses the robustness of the proxy for the number of online bookings. Theoretical and practical implications of the results are described in Section 6, and the last section offers some concluding comments.

2. Background and Research Hypotheses

Web 2.0 and UGC have been, and will likely be, increasingly changing the way that people search, find, ...