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Hotel Quality Appraisal on the Internet: A Market for Lemons?

Author

Listed:
  • Marta Fernández-Barcala
  • Manuel González-Díaz
  • Juan Prieto-Rodríguez

Abstract

Potential guests have difficulties in obtaining reliable ex ante assessments of hotels because of the adverse selection problem. Consumers now have a new source of information about hotel quality: information providers on the Internet. The key issue is the degree of reliability of this information. Two types of Internet information providers can be distinguished: those that also sell the assessed services (‘sale Websites’) and those that do not sell services (‘advice Websites’). The former obtain their income via fees, while the latter obtain theirs via advertising (number of hits). It is argued that the information on advice Websites is more reliable than that on sale Websites because the latter suffer from a misalignment of incentives arising from the inverse relationship between income/reward and the quality of the report. Our results show that sale Websites (fee financed) provide an assessment of the quality of their hotels which is on average 7% higher than the equivalent assessment of advice Websites (advertising financed). This difference increases significantly with the hotel category, with up to a 9% increase for five-star hotels. It is also shown that there are systematic differences in the quality appraisal between these two types of information providers. The main implications for tourists and hotel managers are outlined.

Suggested Citation

  • Marta Fernández-Barcala & Manuel González-Díaz & Juan Prieto-Rodríguez, 2010. "Hotel Quality Appraisal on the Internet: A Market for Lemons?," Tourism Economics, , vol. 16(2), pages 345-360, June.
    • Handle: RePEc:sae:toueco:v:16:y:2010:i:2:p:345-360
    DOI: 10.5367/000000010791305635
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    References listed on IDEAS

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