RESEARCH METHODOLOGY

RESEARCH PROJECT
ON
“Examining the impact of Star Ratings
and Customer Feedback on the decision-
making and purchasing behavior of
potential customers.”

Submitted To: Prof. Dr. Rashmi Singh

Submitted By: Aryan Abhigyan (USCBB22053)

Abhisek Mishra (USCBB22007)
 Research Problem

"How do past negative reviews affect potential customers' perception and

decision-making processes when considering a luxury hotel, despite the
hotel's recent comprehensive transformation and positive feedback?"

Our research problem addresses the issue highlighted in the hypothetical problem. Despite the
positive changes and feedback after the hotel's renovation and rebranding, the presence of older
negative reviews is still influencing potential customers. Our problem centres around the effects
of old negative customer reviews on potential customers' decision-making process and
confidence in the hotel's value proposition, leading to lower online bookings through third-party
platforms. By understanding the reasons behind the lasting impact of negative reviews and their
influence on decision-making, we can devise strategies to mitigate their effects and rebuild trust
in our hotel.

The primary focus of this research is to explore the lingering effects of negative customer
reviews on potential customers' behaviour and decision-making process when considering
booking a hotel, despite significant efforts to improve the hotel's overall quality and image.

The research may delve into various aspects, including the perceived credibility of star ratings
and customer feedback, the extent to which potential customers rely on them for information and
decision-making, how different demographics or customer segments respond to ratings and
feedback, and whether there are any significant differences in the influence of ratings and
feedback across different types of hospitality services.

By examining this, valuable insights can be gained for hospitality businesses to optimize their
strategies, manage their online reputation, and understand how customers use and interpret star
ratings and feedback during their decision-making journey.
 Research Objective

“Examining the impact of star ratings and customer feedback on the

decision-making and purchasing behaviour of potential customers in
hospitality industry”

In the highly competitive hospitality industry, star ratings and customer feedback play a vital role
in shaping potential customers' decisions. This research aims to delve into the intricacies of how
these factors impact consumers when they are considering various hospitality services such as
hotels, restaurants, resorts, and related establishments.

The primary objective of this study is to gain a comprehensive understanding of the factors that
contribute to the perceived credibility and significance of star ratings and customer feedback. By
delving into the minds of potential customers, we seek to uncover the key elements that influence
their decision-making processes and purchasing behaviour.

Throughout the research, we will analyze how potential customers utilize star ratings and
feedback from previous guests to evaluate and compare different hospitality options. We will
explore the factors that lead them to prioritize certain establishments over others, and how these
factors may vary across different demographics and market segments.

Another crucial aspect of our investigation will be to determine whether positive or negative
ratings and feedback have a more substantial effect on potential customers' choices. By
identifying the psychological and emotional factors at play, we aim to shed light on why negative
reviews may sometimes have a stronger impact on decision-making than positive ones, even in
cases where significant improvements have been made.
 HYPOTHETICAL PROBLEM

PROBLEM:
We used to operate an average hotel with minimal facilities, and unfortunately, our customer
reviews and ratings were quite negative. This had a significant impact on potential customers,
who relied on these reviews to form an impression of our hotel even before considering a visit.
As a result, our sales and revenue were insufficient to meet the basic requirements for running
the hotel.
In response to this challenging situation, we made a bold decision to completely renovate the
hotel and revamp the management team. Under the guidance of a new manager, we began a
comprehensive transformation of the entire property, from the rooms and restaurants to the
garden area. We spared no expense in introducing new and luxurious amenities such as a
Swimming Pool, Play Area for kids, Jogging Tracks, Gym, and Spa Centre, striving to turn our
hotel into a truly upscale establishment.
With the renovation complete, we launched a rebranding campaign, positioning our hotel as a
luxury destination. We adjusted our room prices to reflect the high-quality service we now
provided. This strategic move garnered positive feedback from many customers, who found the
price justified by the improved experience.
Despite these positive changes, we faced an obstacle in online sales and bookings. Upon
analyzing the issue, we realized that while we had acquired many positive reviews, the presence
of older negative reviews still affected potential customers. According to a survey, a significant
number of negative reviews have a more substantial impact on customers than an equal number
of positive reviews.
As a result, customers considering our hotel were conflicted. On one hand, they saw the higher
prices and the improvements we made, but on the other hand, the old negative reviews
diminished their confidence in our value for money proposition. Consequently, the number of
customers booking our hotel through third-party platforms like MMT, Trivago, etc. remained
relatively low.
PROPOSED SOLUTION:
To address this challenge, we have been actively engaging with customers who had a positive
experience during their stay, encouraging them to share their feedback online. Additionally, we
have been working diligently to resolve any outstanding issues with customers who left negative
reviews in the past, aiming to improve our overall rating and reputation.
We remain committed to providing exceptional service and experiences to our guests and are
determined to overcome this hurdle. Our goal is to rebuild trust and ensure that our online
presence reflects the true quality of our newly transformed luxury hotel.
 Literature Review

SL Limitations and
Author(s) Journal Year Objective Variables Used
No. Future Scope

To understand the
effects of star
ratings and Potential Lack of
valence on review Review valence, Realism, Different
perception and Review Review Formats,
University of purchase sentiment, Consumer
1 Schreck 2018
Central Florida intentions among Decision Awareness,
individuals with making, False Consideration of
different cognitive reviews Variables in Online
levels in the and Offline Sales
context of online
shopping.

To examine the
impact of online
Hotel industry, Individual
International consumer
EWOM, Online Occupancy Data,
Journal of reviews,
marketing, Influence of Reviews
2 Viglia et al. Contemporary 2016 particularly in the
Pricing, Hotel on Pricing, Testing
Hospitality context of the
performance, Online Review
Management hotel industry, on
Occupancy rate Influence Over Time
hotel occupancy
rates.
 To use predictive
text analytics to
identify and
analyze sentiment
Limited Online
drivers from Online review,
Review Platform,
unstructured Unstructured
Scope of
online hotel data, Text
Asia - Pacific Unstructured Data,
reviews in analytics, Hotel
Journal of Diverse Online
3 Ho et al. 2020 Malaysia, sentiment
Business Review Platforms,
providing drivers, Hybrid
Administration Cross-Country
valuable insights approach,
Comparison,
to hotel operators Predictive
Additional
for improving analytics
Performance Metrics
their services and
conditions based
on customer
feedback.

To examine the
impact of two
service quality
Self-Selection Bias,
metrics, star
internet Lack of Time
rating, and
customer Dimension,
customer rating,
reviews and Integration of Sales
The Service on hotel room
ratings; online Data, Impact of
4 Ogut & Tas Industries 2011 sales and prices in
hotel booking; Third-Party
Journal Paris and London,
online hotel Websites, Analyzing
with a focus on
price; service Written Comments,
understanding
quality metrics Consumer
how customer
Characteristics
ratings influence
online sales and
pricing dynamics.
 To investigate the
impact of review
ratings,
recommendations,
Lack of Consumer
and search listings
Attitudes Data,
on converting Conversion,
Single Data Source
website visitors Collaborative
International and Duration,
into customers for filtering, Search
Journal of Identification of
hotels, with a listings, Online
5 Cezar & Ogut Contemporary 2015 Direct Competitors,
focus on hotel booking,
Hospitality Considering
identifying the Online customer
Management Multifaceted
key factors that reviews and
Competition,
drive conversion ratings
Utilizing Search
rates in online
Listings (Ranking)
channels and their
implications for
hotel marketing
strategies.
To investigate the
impact of
language and
country on
various aspects of
customer reviews
(volume, valence, Consumer
and helpfulness) behavior; Consumer
Journal of on online international Complaining
International platforms, marketing; Behavior, Review
6 Barbro et el. 2019
Consumer particularly for cross-country Length,
Marketing multinational marketing; word Understanding the
firms selling of mouth; online Digital Marketplace
global brands, reviews
while also
exploring
response biases
and cross-country
comparability of
review content.
 To examine how
guests' trip
purpose and hotel
star rating
influence the
relationships
between
s Service
perceived value
quality, Value Ambiguity in
for money,
International for money, Distinguishing
service quality,
Journal of Guest Hotels, Limited
Rajguru & guest satisfaction,
7 Contemporary 2017 satisfaction, Sample, Trip Types,
Hassanli and word of
Hospitality Hotel star rating, Comparison within
mouth
Management Trip purpose, High Yield
recommendation
WOM Management Hotels
in the context of
recommendation
Singaporean
hotels, providing
insights for hotel
managers to tailor
services based on
guest expectations
and star ratings.

To understand
why negative
customer reviews
might sometimes Elaboration
have a positive likelihood
Focus on Direct
Nankai impact on sales, model, Multi-
Effects, Examination
Business by exploring how method,
8 Yang et al. 2019 of Other Moderating
Review the variation in Motivation to
Factors, Memory and
International customer reviews learn, Negative
Purchase Intention
can change the customer
way negative reviews
reviews affect
business
performance.
 To examine
whether providing
culturally
customized
review
information based : Consumer
on nationality online review;
Inability to Link
influences Review rating;
Managerial
customers' Textual contents
Implications,
Journal of intention to of review;
Interaction of
9 Kim et al. Interactive 2018 recommend an Cultural
Summary Ratings
Marketing online travel difference; U.K.
and Textual Content,
agency, and to consumers; U.S.
Influence of
investigate the consumers;
Company Reputation
impact of cultural China
differences on consumers
review posting
patterns in terms
of review ratings
and textual
contents.
To compare and
analyze the
distribution of star
ratings across
different product
categories and
between two
Temporal Nature of
online retailers,
Star rating, Attribute Evaluation,
Vilakshan - Amazon and
Online reviews, Lack of Demographic
Venkatesakumar XIMB Journal Flipkart, in order
10 2020 Cues, Signals, Analysis,
et al. of to understand
eWOM, Incorporating Mood
Management their distinct
Distribution of Consumers, Brand
communication
Level Analysis
strategies and
provide insights
for consumers in
making informed
decisions based
on online review
characteristics.
 To examine the
relationship
between review
text valence and
product star
ratings in user-
generated
reviews, finding Emotionality;
that negative Sentiments; Star
Negativity Bias in
Indian Institute sentiments in ratings; User-
Longer Reviews,
Ramachandran of reviews have a generated
11 2018 Refinement of
et al. Management, stronger influence review;
Sentiment Analysis
Bangalore on determining Generalised
Techniques
product ratings logistic
than positive regression
sentiments,
suggesting a
managerial focus
on reducing
negative
performance
disconfirmation.
To investigate the
consistency
between star
ratings and
sentiments
expressed in
online reviews for
tourism Sentiment Single Type of
attractions in analysis · Deep Tourism Service,
Venice, using learning · Additional Factors
University of deep learning and Artifcial neural Influencing Customer
12 Bigne et al. 2022
Valencia machine learning networks · Ratings,
techniques to Tourism Generalizability to
understand how destination · Different
positive and Star rating Destinations
negative
components of
customer
experiences
impact overall
polarity and star
ratings.
 Variables Identified

Star Ratings (Independent Variable): This variable refers to the numerical ratings (e.g.,
1 to 5 stars) that customers give to the hotel or hospitality establishment based on their
experience. The star rating is an independent variable as it is not directly influenced by the
potential customers, but it can significantly impact their decision-making process.

Customer Feedback (Independent Variable): This variable encompasses the

comments, reviews, and opinions shared by previous customers about their experiences with the
hotel. Customer feedback is an independent variable as it is generated by customers and can
influence potential customers' perceptions.

Potential Customers' Decision-Making Process (Dependent Variable): This

variable represents the process through which potential customers gather information about the
hotel, evaluate different options, and make a decision about whether to book a stay or not. It is
the dependent variable as it is influenced by star ratings and customer feedback.

Perceived Credibility of Ratings and Feedback (Mediating Variable): This

variable represents how potential customers perceive the credibility and trustworthiness of the
star ratings and customer feedback. It could influence how much weight they give to the ratings
and feedback while making their decisions. Perceived credibility acts as a mediator between the
independent variables (star ratings and customer feedback) and the dependent variables
(decision-making process and purchasing behaviour).

Online Presence and Reputation (Mediating Variable): This variable relates to the
hotel's online visibility, reputation, and overall digital footprint. It includes factors such as the
number of reviews, overall rating on various online platforms, the frequency of recent reviews,
and responses to customer feedback.
Online presence and reputation can act as a mediating variable between star ratings, customer
feedback, and potential customers' decision-making processes. A strong online presence with
positive reviews may increase potential customers' confidence in the hotel's services, while a
weak or negative online reputation might hinder their decision to book a stay.

Investigating how online presence and reputation influence the impact of star ratings and
customer feedback on potential customers' decision-making could offer valuable insights for
hotel management to improve their online strategies and effectively address any negative
perceptions.
 Conclusion of Qualitative Interview

Based on our qualitative interviews, we have drawn the following key conclusions:

1. The star ratings and customer reviews hold immense influence over the decision-making
process of potential customers when it comes to planning their vacations and selecting the
perfect accommodation. These ratings and reviews serve as powerful tools that aid travellers in
assessing the overall quality, reputation, and suitability of hotels, resorts, or other lodgings
before they make their reservations. By perusing these valuable insights, travellers gain a deeper
understanding of the level of service, amenities, and experiences that they can expect during their
stay.

2. The availability of star ratings and previous customer reviews provides potential customers
with valuable insights into the hotel's offerings, allowing them to make informed decisions
without physically visiting the location beforehand. Positive reviews tend to have a positive
impact on customers' decision-making, while negative reviews and ratings have a corresponding
negative effect.

3. In the fast-paced world of the hospitality industry, a hotel's reputation can sway dramatically
due to fluctuations in customer feedback. In cases where a reputable hotel's ratings have
significantly dropped, and recent negative reviews are prevalent, customers' decisions on
whether to choose that hotel as an option for their vacation vary. Some individuals hesitate to
choose this hotel as an option for their vacation, feeling cautious about the recent negative
feedback and unsure of the impact it may have on their stay. They opt to explore alternative
accommodations that seem to offer more consistent experiences and positive testimonials.

On the other hand, some loyal patrons of these hotels continue to support their favorite places,
even amidst recent declines in ratings. They cherish fond memories of past positive experiences
and trust the hotel's values and services. They believe that the recent negative reviews might be
isolated incidents or temporary problems. Their unwavering devotion to the hotel reflects the
strong emotional bond they have formed, leading them to overlook recent setbacks in hopes of
reliving the exceptional experiences they once enjoyed.

In conclusion star ratings, customer reviews, and the decision-making process of potential
customers is a fascinating phenomenon that significantly impacts the hospitality industry.
Travelers, with this wealth of information, can make more informed choices, ensuring that their
vacations are marked by unforgettable experiences and cherished memories. Likewise, for
hoteliers and accommodation providers, this symbiotic relationship underscores the importance
of consistently delivering exceptional service and maintaining a positive reputation to foster
enduring customer loyalty and trust.