A new study shows that social media plays a key role the tourism and hospitality industry.

Researchers from the universities of Waterloo and Birmingham have released a study, “Service Recovery via Twitter: An Exploration of Concerns to Consumer Complaints,” which shows that social media has a significant role in decision-making, customer satisfaction and managerial performance in the tourism and hospitality industry. The study was conducted by both Dr. Seda Oz from the University of Waterloo and Dr. Doga Istanbulluoglu from the University of Birmingham.

The report adds a company’s future performance and financial outcomes can be impacted by the frequency in which a company tweets and its overall engagement with costumers on Twitter.

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Oz, an assistant professor from Waterloo’s School of Accounting and Finance, said this study helps to contribute to the understanding of how service recovery is conducted on social media platforms like Twitter.

“With social media playing an increasingly important role as a communication channel, it is crucial to explore how companies handle service failures and engage with customers online. By including service recovery measures in performance systems, managers can have a better grasp of their controllable results and perceive managerial performance systems as more effective.”

The report addresses a gap in previous research by looking into the connection between customer complaints and managerial performance and it helps to find solutions for non-financial performance measures in improving decision-making and resource allocation.

More than 10,000 tweets were collected and analyzed for the study. These were used to document organizations’ responses to consumer complaints across four industries, including airlines, casual dining chain restaurants, hotels and fast-food restaurants.

By applying the traditional service recovery model, the study shows the varying degrees of implementation within the sample. These consist of five services, them being apology, urgent reinstatement, empathy, symbolic atonement and follow-up.

There are also three extra service recovery tactics that the report address, which includes feedback acknowledgement, information request and channel.

“When companies address customer complaints online in a favourable way, there are economic implications for both individuals and companies. Satisfied customers are more likely to continue doing business with companies, leading to improved customer retention and increased revenue.”

Oz added companies that prioritize service recovery and customer satisfaction tend to enjoy a better reputation, attracting more customers and gaining a competitive advantage in the market.