Management Responding Strategy to Customer Online …

Management Responding Strategy to Customer Online Reviews: A Case Study of Hotels in Taiwan

Pei-Chih Ma Working Paper CISL# 2017-11

May 2017

Cybersecurity Interdisciplinary Systems Laboratory (CISL) Sloan School of Management, Room E62-422 Massachusetts Institute of Technology Cambridge, MA 02142

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Management Responding Strategy to Customer Online Reviews: A Case Study of Hotels in Taiwan

By

Pei-Chih Ma

M.B.A., Graduate School of Business, Sungkyunkwan University, Republic of Korea, 2017 B.A., Mass Communication, Tamkang University, Taiwan, 2003

SUBMITTED TO THE MIT SLOAN SCHOOL OF MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF SCIENCE IN MANAGEMENT STUDIES AT THE

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

JUNE 2017

?2017 Pei-Chih Ma. All rights reserved.

The author hereby grants to MIT permission to reproduce and to distribute publicly paper and electronic

copies of this thesis document in whole or in part in any medium now known or hereafter created.

Signature of Author: _____________________________________________________________ MIT Sloan School of Management May 12, 2017

Certified by: ___________________________________________________________________ Stuart E. Madnick

John Norris Maguire Professor of Information Technologies & Professor of Engineering Systems Thesis Supervisor

Accepted by: ___________________________________________________________________ Rodrigo Verdi

Associate Professor of Accounting Program Director, M.S. in Management Studies Program

MIT Sloan School of Management

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Management Responding Strategy to Customer Online Reviews: A Case Study of Hotels in Taiwan

By

Pei-Chih Ma

Submitted to MIT Sloan School of Management on May 12, 2017 in Partial Fulfillment of the

requirements for the Degree of Master of Science in Management Studies.

ABSTRACT

The hospitality industry in Taiwan is experiencing unprecedented opportunities and challenges. For decades, the industry has been growing rapidly, but the sudden decreases in visitor growth has led to increased competition among hotels. To attract more international guests, hoteliers have started to manage their online reputations-- by responding to online reviews.

In this study, we analyzed online customer reviews and the responses of 31 hotels. A clear trend was observed: hotels are putting more resources into online management responses. We also interviewed ten hotels to learn how they manage these responses, what challenges they face in responding to online customer reviews, and how they use online reviews for other management purposes.

We found that most hotels in the case study manage customer responses reactively rather than proactively; they lack strategic goals and methods for evaluating ROI. We also found that executive involvement and the hotel's internal communication style affect how customer responses can be used as a tool to improve the servicerecovery process. Using online customer as a source of employee performance evaluation and linking customer feedback to encouragement scheme are also found in some hotels' practice. Future studies should further investigate how hotels' internal communication styles and response strategies and behavior affect service-recovery and customer loyalty. The use of online customer reviews to help improve other aspects of management such as human resource management is also suggested to be studied.

Thesis Supervisor: Stuart E. Madnick Title: John Norris Maguire Professor of Information Technologies & Professor of Engineering Systems

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