Official and Subjective Hotel Attributes Compared: Online Hotel Rates in Shanghai

A number of valued attributes determine the room rates that hotels charge. These attributes include not only room quality characteristics, but also access to various shared hotel facilities, service quality and access to amenities beyond the hotel itself. Using Box-Cox-transformed and pre-specified hedonic price functions, this paper reports estimated implicit prices for hotel room attributes in Shanghai. Internet-based hotel rates are regressed against official star ratings, consumer feedback scores and objective attributes, as reported by a global online travel agency. Most attributes are significant in all functional specifications; consumer perceptions-particularly subjective location attractiveness and an index of all-attribute ratings-explain much of the variability within a given star-rating of the hotel. Online ratings are at the same time imperfect substitutes and imperfect complements for official star ratings. The results imply that online ratings are as important in Chinese hotel markets as they are in the most advanced regions of the world.