Blessing in Disguise? Environmental Shocks and Performance Enhancement
72 Pages Posted: 24 Jul 2018
Date Written: June 20, 2018
This paper studies how hotels and their guests respond to exogenous detrimental environmental shocks. We employ a unique dataset of online reviews covering all the hotels in Singapore and Hong Kong from three prominent hotel-booking platforms. The results show that the review scores of hotels in Singapore dropped sharply by up to 0.35 points during the haze periods and reverted immediately to and exceeded eventually their previous level after the haze shock. We discuss possible explanations for the observed effects, including hotels' service quality, managers' efforts and guests' mood. Negative environmental shocks motivate managers to reflect on their operating efficiency, and active communication on online travel reviews prompts reflection and service improvements. At the same time, large-scale improvement in service quality is not persistent and increases at a decreasing rate during subsequent environmental shocks. Our findings shed light on the importance of realizing deficiencies on management and operation in the presence of negative shocks and contribute to a growing literature on environment, interruption, and management at the micro level.
Keywords: Air pollution, Productivity, Performance, Tourism, Information and Learning
JEL Classification: Q51, Q53, Z30, D83, D22
Suggested Citation: Suggested Citation