Online Hotel Reviews, though Skewed, May Impact Rates

By Glenn Withiam, director of publications, Cornell Center for Hospitality Research | February 12, 2014

In a previous column, I discussed how four Seattle hotels were dealing with online reviews. Managers at all four hotels read the reviews, but only two hotels respond. The other two hotels make a public response rarely, if ever. The hoteliers that read but don’t respond to posted reviews contend that online reviews represent the two extremes of guest comments — the very pleased and the very unhappy. These hotels investigated problems, but did not post apologies or explanations.

Jonathan Barsky, co-founder and chairman of Market Metrix and a professor of marketing at University of San Francisco’s School of Business and Management, agreed with these hotels’ managers based on his own study that found a negative tilt to TripAdvisor reviews. Barsky suggests that hotels need to hear from all guests to get a complete picture of the hotel stay, and not just social media posters. In a similar vein, a Pew Research Center study of Twitter recently concluded that the people who tweet are not in any way representative of any particular population. Moreover, different people react to different topics, so Twitter comments don’t reflect the same non-representative sample on every topic.

I decided to look up TripAdvisor comments on a mid-market hotel in Lenox, Massachusetts, where I once stayed. The hotel had been savaged by numerous guests, while others had enjoyed the place. Based on my own experience, I could identify exactly the source of both the pans and the raves. What some people hated, I found merely to be a minor annoyance (for example, a frosty front desk). But it’s hard to find a modestly priced place in Lenox during the season, so perhaps one guest makes allowances for minor glitches while another finds them insufferable.

Perhaps the problem here is that when people are using TripAdvisor or other sites to choose a hotel, they do not have access to all guests’ comments. Instead, they can only see what’s posted, and that is probably just the two ends of the satisfaction distribution.

Positive reviews yield positive ROI
A study by Chris Anderson of the Cornell School of Hotel Administration notes that the percentage of consumers consulting reviews at TripAdvisor prior to booking a hotel room has steadily increased, and so has the number of reviews they are reading prior to making their hotel choice. Perhaps prospective guests are triangulating between the extreme comments; perhaps they are evaluating how important a “negative” might really be to their own stay.

More to the point, Anderson estimates the monetary benefit of good reviews. Using data from Travelocity he found that if a hotel increases its review scores by 1 point on a 5-point scale (e.g., from 3.3 to 4.3), the hotel can increase its price by 11.2 percent and still maintain the same occupancy or market share. Then, he took hotel data from ReviewPRO (www.reviewpro.com) and STR (www.strglobal.com) and matched review scores to sales, occupancy, and revenue data. A regression analysis of these statistics found that a 1 percent increase in a hotel’s online reputation score leads to as much as a 0.89 percent increase in price as measured by the hotel’s average daily rate (ADR). Occupancy and RevPAR likewise benefit from increased scores.

To say the least, the hotel industry continues to see an evolution of its distribution channels and reviews posted on social media are one facet of a much larger picture. Perhaps as time goes on we’ll learn whether guests really want an electronic relationship that involves responses to tweets and postings, or whether guests just want to blow off steam about some point of dissatisfaction and that is the end of it. Either way, it seems that hoteliers cannot simply disregard online comments.




What was your first job?
Picking green beans at the Cornell Agricultural Experiment Station

Who inspires you?
Anyone who has persevered in the face of adversity

What are your hobbies?
Bicycle riding and running

What technology excites you?
We live in an age of miracles that we can electronically communicate, look up infor-mation, and so forth in a heartbeat. Medical advances are also quite impressive of late.

Words of Wisdom:
Whether you’re speaking of publishing or hospitality the answer is the same, don’t let technology get in the way of being a mensch.

What is one other field that you would like to try?
Professional chef

Who would you invite to lunch?
Mark Twain & Theodore Roosevelt

Top movie/book:
Some Like It Hot

Favorite vacation spot:
New York Adirondacks, but I love the Grand Canyon, Crater lake, Acadia, and the Oregon Coast.

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