How can customers' opinions affect the price of hotels? Empirical evidence from Madrid

Abstract

This study attempts to evaluate the influence of online consumer opinions on hotel prices in the city of Madrid. Almost all the information available on the BOOKING website was collected on 23 February 2019 and 19 April 2019, for 22 May this year, for the hotels in this city obtaining a sample of 134 hotels. With this a hedonic model of prices is developed, obtaining results that suggest that the online opinions of consumers have a great influence on these prices, as well as other variables such as the number of stars in the hotel, the distance to the centre of the hotel or the size of its rooms. Consumers now appreciate the rating of former consumers much more than they did a few years ago, so this study can serve as a basis for future, more specific analyses aimed at hotel managers on how to maximise good online opinions about their hotel.