I've posted this elsewhere, as well.
I got curious about how people actually perceive star ratings, so I posted some polls on Toluna. These are the results so far (enough votes on each to be statistically significant).
Asked about HOTEL ratings, with 5 stars being Excellent:
7 people said they thought 1 star = Average
22 = Very Basic
12 = No Good
10 people said they thought 3 stars = Good
19 = Better than Average
19 = Neutral
2 = Below Average
Asked about RESTAURANT ratings, with 5 stars being Excellent:
4 people said they thought 1 star = Better than Average
11 = Average
19 = Basic
7 = No Good
14 people said they thought 3 stars = Good
28 = Above Average
24 = Neutral
3 = Below Average
1 = Poor
Asked about an unassigned Five Star rating with 1 being Bad and 5 being excellent:
5 people said they thought 3 stars = Very Good
21 = Good
22 = Above Average
27 = Average
1 = Below Average
0 = Poor
In other words, people assign a wide range of meanings to the mid-range star ratings, and incidentally those restaurants that struggle so to get a coveted 1 Star from some prestigious organisation, may as well not bother since most people regard 1 star as a negative.