Star rating system helps prospective customers to assess what to expect from a hotel with a specific star and provides guidelines for them to make less risky hotel reservations by signaling that higher star hotels provide better service. Thus, star rating is considered as one of the most important attributes in the hotel selection process (Callan
1998). As another quality measure, online customer ratings complement star rating by considering the opinion of
customers. It has been also shown that there is a significant positive relationship between the online product rating and successive sale of the product on that site (Dellarocas et al. 2007, Chevalier and Mayzlin 2006). Specifically, nline hotel sales by up to 2.68% in Paris. Industry reports support these findings by reporting that 87% of the customer revealed that user generated content significantly affected their hotel selection decision and 40 % of the people stated that they read prior to their stay at that hotel (comScore and the Kelsey Group, 2007). Thus, customer and star ratings may signal
international visitors and all else equal, both domestic and international customers are more likely to prefer hotels with higher average customer (star) rating to hotels with lower average customer (star) rating. On the other hand, reviews and ratings reflect the subjective opinions of consumers and consumers take this into account and discount the credibility of review and ratings (Pathak et al. 2010). Thus, domestic and international customers may be affected differently for the customer and star rating of the hotels. In general, domestic customers are more informed about the hotels and their locations than international customers. Furthermore, domestic customers does not have language barrier as they can easily communicate with the local people in case they need help. For these reasons, domestic customers are more likely to prefer to stay at a hotel with high customer (star) rating which is not located at the very er (star) rating at the city
center. Therefore, we expect that customer (star) ratings impact the domestic demand positively as a proportion of
total demand.