Online Hotel Reviews: More Important than Cost when Booking a Room!

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Online hotel reviews are increasingly having an impact on room demand and appear to be responsible for rate swings of more than 10%, according to reports published by the Cornell University School of Hotel Administration.

The study found a direct link between the rise or fall of revenue per available room (RevPAR) and improvements or declines in the online reputation of a hotel, driven by ratings on sites such as TripAdvisor and Travelocity.

Specifically, a one-point swing on Travelocity’s five-point rating scale, on average, sways room rates by 11%, according to the report. Factoring in multiple review sites, a 1% increase in the hotel’s “online reputation score” was found to boost RevPAR by almost 1%. They found that a hotel’s review score increased RevPAR for higher-end hotels, regardless of the number of reviews. On the other hand, a lower-end hotel’s RevPAR generally increased as the number of reviews increased.

The report is believed to be the first to quantify the effect of online reviews on room rates and RevPAR within the $116 billion U.S. hotel industry.

Hotel Room 2

The subject is of increasing importance to the industry because the combination of the rapid adoption of social media by travelers and the growth in online travel booking means the impact of online reviews will continue to grow.

As more reservation volume moves online and becomes intermediated by the Web, versus a person we can ask questions of, then reviews will play an increasing role.

A Travelocity study reported that 77% of potential hotel guests cited online reviews as a factor in choosing a hotel, overtaking factors such as location, price and loyalty points. And, 80% of those people will read at least 6-12 hotel reviews before making a decision on where to stay.  These numbers are believed to be much higher when factoring out business travel that may be done with less research due to corporate partnerships.

Moreover, it was found that “independent hotels and smaller or lesser-known brands are far more susceptible to the impact of ratings and reviews. Consumers will do more research on hotels where they do not have a clear set of expectations based on the brand.”

In the past, TripAdvisor has said that a poll of more than 2,700 people by PhoCusWright had found that 53% of prospective travelers would refrain from booking a room at a hotel for which no reviews were available.

A few more numbers from the study:
• Travelers are 3.9 times more likely to choose a hotel with higher review scores when the prices are the same.
• When hotel prices are increased for hotels with better review scores, travelers are more likely to book the hotel with the higher score even when it costs more.
76% of travelers were willing to pay more for a hotel with higher review scores, when asked explicitly.

Hotel Pool“This research shows that travel reviews have a significant impact both on conversion rates as well as pricing,” said Margaret Ady, Vice President of Marketing at TrustYou. “Hoteliers that effectively manage and improve their online reputations have the opportunity to increase revenue, both with more bookings and higher prices.”

Studies also found that if a guest gave a negative review about a hotel (a rating of 1 or 2 on a five-point scale), management could influence the guest to subsequently give a positive review if management responded to the negative review.

“Compared to other industries, hospitality is well positioned to lead the way in this responding to social media commentary. Why? Because the industry has a longstanding tradition of actively soliciting, listening and responding to customer feedback…Hospitality is hyper-competitive and few businesses can survive for long unless they consistently satisfy their customer base…Customer service training is an integral part of the industry, and this focus extends naturally to responding to social-media commentary…Hotels, restaurants and property-management companies have undoubtedly picked up insights on how to improve facilities and services through comments & reviews.”

Interested in Increasing the Number of Online Reviews for Your Hotel, Motel or Resort?

 

Contact BARQAR today for a FREE demo of our online reputation management services!

 

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