How Much Does the Number of Customer Reviews Affect Overall Ratings?

While reading the 2013 Hoscars thread I started to become curious about how the total number of reviews affects the Hostelworld average rating.

I created a spreadsheet to look at whether a lot of reviews makes it easier or more difficult to maintain a high rating:
https://docs.google.com/spreadsheet/ccc?key=0AqBCQF7_ZKytdEZsN19hMUYzZTF...

Explanation:

• The spreadsheet shows a hostel with 90% rating
• Column A shows the number of reviews
• Column B shows the new average rating after getting ten 20% ratings
• Column C shows the new average rating after getting ten 100% ratings

Outcome:

• A few bad reviews can have a much larger effect than good reviews.
• The fewer reviews that a hostel has, the more damaging a few bad reviews is
• Hostels with fewer reviews might be in a less stable position

Examples:

• If you have a 90% rating with 50 reviews and get ten 20% reviews, you drop to 78.33%. If you instead get ten 100% reviews, you end up at 91.67%.
• If you have a 90% rating with 100 reviews and get ten 20% reviews, you only drop to 83.64%. If you instead get ten 100% reviews, you end up at 90.91%.

You can download a copy of the spreadsheet to play with the numbers. There are three sheets: one for a hostel with an average rating of 90%, one for 80%, and one for 70%. I thought that the charts were interesting. Here is the 90% chart:

The 80% chart shows the greater effect of negative reviews on average rating -- there is a lot more red than green for the same number of negative and positive reviews: