Pauls Valley, OK, Pauls Valley Democrat

Business

August 16, 2012

Should you trust online travel reviews?

(Continued)

The study's authors argue that the small owners and independents have less to lose by trying to goose their online ratings (or torpedo the ratings of their neighbors), reasoning that larger companies would be more vulnerable to punishment, censure and loss of business if their shenanigans were uncovered.

The researchers find that, even comparing hotels under the same brand, small owners are around 10 percent more likely to get five-star reviews on TripAdvisor than they are on Expedia (relative to hotels owned by large corporations). The study also examines whether these small owners might be targeting the competition with bad reviews. The authors look at negative reviews for hotels that have competitors within half a kilometer. Hotels where the nearby competition comes from small owners have 16 percent more one- and two-star ratings than those with neighboring hotels that are owned by big companies like Pillar.

This isn't to say that consumers are making a mistake by using TripAdvisor to guide them in their hotel reservations. Despite the fraudulent posts, there is still a high degree of concordance between the ratings assigned by TripAdvisor and Expedia. And across the Web, there are scores of posters who seem passionate about their reviews.

Consumers, in turn, do seem to take online reviews seriously. By comparing restaurants that fall just above and just below the threshold for an extra half-star on Yelp, Harvard Business School's Michael Luca estimates that an extra star is worth an extra 5 to 9 percent in revenue. Luca's intent isn't to examine whether restaurants are gaming Yelp's system, but his findings certainly indicate that they'd profit from trying.

The accumulating evidence on the gaming of review sites is a reminder of the limits of an open-source approach to rating quality. It works just fine in circumstances where there's only a modest payoff to inflating a product's rating, or where boosting the rating would require a massive effort by the cheaters. The quality of online reviews is also surely increased when they are tied into social-networking platforms, which construct recommendations based on social connections and which often lift the veil of anonymity that makes cheating easier. It's less likely to work in situations with little accountability and scores to be settled, or in circumstances where customers have a limited knowledge of the product they're buying. You probably wouldn't want to pick a brain surgeon by browsing online reviews.

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