How small hotels can drive value their way in infomediation. The case of “Italian hotels vs. OTAs and TripAdvisor”

Infomediaries such as online travel agencies (OTAs) and review aggregator websites are profoundly changing the structure of the hospitality industry with consequences in the mechanisms of creation and capture of economic value for hotels. By drawing on arguments from resource-based views, transaction cost economics and industrial organisations, we look inside these mechanisms by assessing whether in regard to creation and capture of economic value hotels should pay more attention to diversify the number of OTAs that distribute their services or to improve their reputation through travellers’ reviews posted on TripAdvisor. Gathering data on 62,865 travellers’ reviews on TripAdvisor and on the presence of hotels on multiple OTAs, we built a panel dataset of 355 hotels spanning from 2004 to 2014 and also including hotels’ financial data. Fixed effects regression models show that hotels listed on multiple OTA bolster sales revenue and operating profitability. We demonstrated that for hotels, the online visibility on OTAs counts more on value capture than the online reputation gained on TripAdvisor. Through the presence on multiple OTAs, hotels are expected to have a higher bargaining power towards each individual distributor. We discuss the implications of these results on the way hotels, OTAs and TripAdvisor can generate and capture value in the vertical chain of the travel industry.