Exploring the Effect of Positive and Negative Social Media Themes on Luxury Hotels’ Financial Performance

Abstract

This study aims to deepen our understanding of the relationship between social media themes and hotel financial performance. Specifically, we explore the themes of place, promotion, expectation, quality, intent, availability and convenience, evaluating their underlying positive or negative tones to gain deeper insights into their impact on financial performance. To achieve this, we sourced data from the Infegy Atlas social media database and the Thomson Reuters Asset4 database, encompassing hotel firms worldwide from 2007 to 2021. Our findings reveal that among the seven themes analysed, the positive tones associated with four themes (place, expectation, intent and convenience) are positively associated with luxury hotels’ return on assets (ROA). In contrast, negative themes do not exhibit a significant association with financial performance in the full sample. However, further analysis focusing on these four themes during the COVID-19 period indicates that negative tones exert a detrimental effect on ROA under conditions of heightened uncertainty. Importantly, this adverse association is attenuated in firms with high capital expenditure and goodwill, indicating that sustained investment and reputational standing buffer the financial impact of negative social media discourse. Conversely, the positive themes do not exhibit significant interaction effects with the COVID-19 period, capital expenditure, or goodwill. Overall, the results offer important insights into how the tone of social media conversations shapes financial outcomes in the luxury hotel industry.