The saturation effect in hotel managerial response

Abstract

Hotel booking platforms widely adopt managerial response. The literature supports its positive effect on product/service evaluations, but the question of a potential saturation effect and its implications are yet to be analyzed. The present study fills this gap by empirically analyzing 4,888 hotels and over two million hotel reviews and finds that 1) managerial response enhances future ratings of hotels with low rating with a diminishing marginal utility, 2) the effect of managerial response on reducing rating fluctuation mainly works for hotels with high variance, and 3) the effectiveness of managerial response in enhancing the rating valence and reducing the rating variance of a hotel weakens when dealing with experienced consumers. These findings provide direct implications for hotel booking platforms and hotel managers.