New Study Shows Higher Review Scores Drive Hotel Pricing Power
2013-01-21 13:19:35 -
TripAdvisor®, the world’s largest travel site*, today shared the results of a new study by Associate Professor Chris Anderson, at Cornell University’s Centre for Hospitality Research that further supports research findings published by TripAdvisor on how essential online traveller reviews have become for hotels. In a first attempt at determining ROI of social media and reviews, “The Impact of Social
Media on Lodging Performance” validates a direct link between online customer satisfaction and the overall revenue performance of hotels**.
Data from ReviewPro, STR, Travelocity, comScore and TripAdvisor have been combined to show social media’s growing influence on the consumer research process and how this influence, in turn, can impact a hotel’s ability to set prices, drive occupancy and increase revenue.
Reviews are Crucial to Hotel Selection Process
An increasing number of Indian travellers are visiting TripAdvisor as part of their hotel selection process. TripAdvisor’s data shows that from December 2011 to December 2012, monthly page views for accommodations in India on site have increased by 68.7 percent.
Reviews play an important role in travellers’ decisions when booking a hotel. According to an earlier study conducted by PhoCusWright on behalf of TripAdvisor***, more than half (53 percent) of respondents state that they will not book a hotel that does not have any reviews on the site, and 87 percent of users agree that TripAdvisor hotel reviews “help me feel more confident in my decisions”.
The recently published Cornell report further shows that a little more than one-fourth (26.5 percent) of TripAdvisor visits occur in the last five days prior to reservation booking – a pattern indicating that user reviews are one of the final criteria in the hotel booking process. Additionally, those who are already using the site are returning more often and all users are viewing more reviews before making hotel choices.
“The good news is that the majority (70.7 percent) of Indian accommodations that have been reviewed on TripAdvisor have a rating of 3.5 or higher (out of 5). We encourage Indian hotels to ask their guests to write a candid review on TripAdvisor,” said Brian Payea, Head of Industry Relations, TripAdvisor.
“Furthermore, to increase their popularity ranking, Indian hoteliers must encourage new reviews to help build their TripAdvisor overall review score. Recent reviews count more in a property’s popularity ranking and satisfy travellers’ desire to see fresh feedback before they make a booking decision,” added Mr. Payea.
Higher Review Scores Drives Hotel Pricing Power
The Cornell study found that increases in a hotel’s user review scores can positively influence the relationship between price increase and demand. Higher review scores allow hotels to charge more while maintaining occupancy rate.
According to the study, for every 1-point increase in a hotel’s 100-point ReviewPro Global Review IndexTM (GRI), a hotel can see a 0.54 percent increase in occupancy, which can lead to an 11.42 percent increase in revenue per available room. The study confirms that the positive effect of an increased user review score can offset the negative occupancy impact that is typically attributed to higher prices.
Further, the Cornell Study shows that as a property’s social reputation improves, its overall performance also improves. A stronger online reputation allows a hotel to increase its prices while maintaining the same occupancy levels. The rating increase therefore leads to higher revenue and improved performance.
“Through the combination of multiple data sources we have been able to show not only the increasing role of user reviews in the purchase decision, but also how this use translates to pricing power and improved revenue per available room,” said Chris Anderson. “This is evidence of the potential return on investment to hotels for encouraging and managing reviews.” The full report can be found at www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-1 ..
Management Responses: Higher Engagement, Ratings
The Cornell study also reinforces findings from a recent TripAdvisor study; hotels in the Asia Pacific region that post management responses to traveller reviews not only see a higher rate of engagement with travellers, but also tend to see higher ratings.
According to the TripAdvisor study, Asia Pacific properties with more than five management responses see 18 percent more engagement from travellers than hotels with less than five management responses.
“The key to improving review scores is to provide the best possible guest experience. Property owners can learn a lot from guest feedback if they take an active role in monitoring reviews, and make the necessary operational changes,” said Mr. Payea.
“Our data shows that in the past 30 days, only 4.7 percent of accommodations in India have responded to user reviews on TripAdvisor. The Cornell study findings offer a compelling case for Indian hoteliers to take immediate action to manage their online reputation by engaging with past guests as well as the wider traveller community through management responses and show them that they’re paying attention and taking customer feedback seriously,” added Mr. Payea.
The TripAdvisor Management Centre offers a range of free tools to help hospitality businesses manage their online reputation, engage with the TripAdvisor traveller community, and connect with potential bookers. To encourage guests to write reviews, hoteliers can use the free tools in the Management Centre such as flyers, e-mail templates, and widgets to remind them to submit a review when they return home.
TripAdvisor® is the world's largest travel site,* enabling travellers to plan and have the perfect trip. TripAdvisor offers trusted advice from real travellers and a wide variety of travel choices and planning features with seamless links to booking tools. TripAdvisor branded sites make up the largest travel community in the world, with more than 60 million unique monthly visitors*, and over 75 million reviews and opinions. The sites operate in 30 countries worldwide, including China under daodao.com. TripAdvisor also includes TripAdvisor for Business, a dedicated division that provides the tourism industry access to millions of monthly TripAdvisor visitors.
TripAdvisor, Inc. (NASDAQ: TRIP) manages and operates websites under 19 other travel media brands, and together the sites attract more than 74 million unique monthly visitors.** TripAdvisor, Inc.'s travel media brands include www.airfarewatchdog.com, www.bookingbuddy.com, www.cruisecritic.com, www.everytrail.com, www.familyvacationcritic.com, www.flipkey.com, www.holidaylettings.co.uk, www.holidaywatchdog.com, www.independenttraveler.com, www.onetime.com, www.seatguru.com, www.sniqueaway.com, www.smartertravel.com, www.tingo.com, www.travel-library.com, www.travelpod.com, www.virtualtourist.com, www.whereivebeen.com, and www.kuxun.cn.
*Source: comScore Media Metrix for TripAdvisor Sites, Worldwide, July 2012
** “The Impact of Social Media on Lodging Performance.” Chris K. Anderson, The Centre of Hospitality Research. Cornell University. November 2012.
*** According to a September 2012 PhoCusWright survey of 2,739 respondents commissioned by TripAdvisor. Participants for the study were solicited at random through a pop-up invitation link on TripAdvisor.com.
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