The moderating effect of agglomeration on horizontal differentiation and online reviews: The case of Paris hotels

Purpose - Hotels are immersed in a very competitive environment and hoteliers have to plan and redesign their strategies to stay in the hospitality industry while faced with a steady rise in competition. Hoteliers can employ horizontal differentiation strategies and pricing decisions to gain a competitive advantage over their competitors. The goal of our work is to analyse the effect of pricing and horizontal differentiation strategy of a hotel on its online reputation and to analyse if the hotel location and agglomeration of competitors moderates their relationship with online reputation. Design/methodology/approach - With a sample of 264 hotels from Paris, an empirical study is developed that aims to analyse, using regression techniques, the impact of price, differentiation, location and competitive environment on online ratings given by consumers in the hospitality context. Findings - The paper provides empirical evidence of how a good location improves the online reputation of a company and how pricing strategies should take into account the location and number of competitors since a good location allows premium prices to be valued positively by consumers while an inappropriate location can produce the opposite effect. Depending on location, the number of competitors can intensify or reduce the effect of price on online reputation. Finally, online reputation only benefits from horizontal differentiation strategies when the degree of agglomeration is low. Originality/value - This work provides insights about how hotels can strengthen their online reputation through pricing and differentiation strategies, incorporating elements of their environment such as location and competition in this decision-making process.