New Study Shows Higher Review Scores Drive Hotel Pricing Power
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
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’
Reviews play an important role in travellers’ decisions when booking a hotel. According to an earlier study conducted by PhoCusWright on behalf of TripAdvisor***
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,”
“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 vytap 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 http://www.hotelschool.cornell.edu/
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 (http://www.tripadvisor.in/
TripAdvisor, Inc. 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.