The Power of Positive Reviews
How Improving Your Hotel’s Reputation Generates More Revenue
By Margaret Ady
You encourage your guests to write reviews; you read all the online comments about your hotel; you diligently respond to these reviews, posts, tweets, etc. When travelers have something great to say about their stay with positive reviews, your heart leaps, and you are the first to take note when you see review scores improving. Yet day in and day out, you are on the receiving end of the same sorts of questions: “What is the ROI of responding to these reviews?” “So what if we improve our online reputation, how does it impact bookings?”
For those who ask why you’re so concerned with all this online review “stuff,” tell them time is money. The time you spend managing your hotel’s online reputation brings in more revenue. How, you may ask?
There are plenty of statistics that show a correlation between your review scores and the investment you make in your reputation. To name a few:
More reviews equate to a better score; the greater the volume of reviews, the less weight a negative review will carry (and 81% of reviews tend to be positive reviews)
Higher-ranking hotels earn better visibility on review sites, which lends itself to a greater appeal amongst travelers, which in turn results in more bookings and revenue
Hotels that respond to online guest reviews, whether positive or negative, average 6% higher review scores than those who don’t
TripAdvisor studies have shown that 71% of travelers think that management responses are important
However, when pressed to show just how much more revenue your better reputation is worth – to truly tie it to dollars and cents – can be tough. It no longer has to be.
TrustYou has analyzed 350 three, four and five star hotels from 10 major markets *, comparing the hotel’s TrustScore, a global score representing all reviews and online opinions worldwide, and its average room rate as listed on TripAdvisor. The study also ensured that occupancy rates of hotels in the sample were all stable. The findings: with a 1% increase in TrustScore, a hotel’s average daily room rate increases about 4.6%. As it turns out, guests are willing to pay more for a hotel with a better reputation.
What to do with these findings:
No doubt you have already optimized your hotel’s room rates, but if you aren’t including review scores and sentiment in your company’s goal-setting, analysis and pricing strategy, you may be leaving money on the table. Hotels should track these scores and actively work to improve them. If a property sees an improvement in its review scores, it may have an opportunity to adjust pricing. With a better reputation, guests are willing to pay a bit more to stay at your hotel than at a competitor with slightly lower rates and a lower reputation.
For hotels testing out these pricing adjustments, I recommend starting small. Consider adjusting prices by just a percent or two if you have seen your reputation improve. If occupancy rates stay the same, consider readjusting in small increments until you find your optimum pricing (i.e. occupancy rates are not dropping). The end result: increased rates that can be directly attributed to an improvement in your online reputation.
As I’ve said from the get-go, your online reputation can drive revenue. So, unless you have a surplus of cash that you just don’t know what to do with, focus on your reputation. You can thank me later.
*10 markets: Amsterdam, Bangkok, Brussels, Hong Kong, London, Munich, Paris, Sao Paulo, Shanghai, Sydney.
Margaret Ady is based in Munich, Germany where she serves as Marketing Director at TrustYou, an online reputation management company specializing in the hospitality industry. She graduated from the University of Southern California with degrees in Economics and Psychology, and where she was awarded the Annenberg Communications Pathway Grant in 2004 for her research in new technology and its impact on health and healthcare decision-making. Margaret has extensive experience in research, marketing and branding strategy, having served in leadership positions at The Walt Disney Company (where she was appointed to the company’s Peer Advisory Board), and The Oprah Winfrey Network. She has also provided research and strategic consulting services to 20th Television (Fox), Nielsen and many other companies in FMCG/Entertainment/IT industries.
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