“In terms of the hotel choice process… the tipping point [for the relevance of reviews] came in 2010… At this point, the guest experience mentioned in customer reviews became the dominant factor in hotel selection.”
|Internal Presentation to DMW Clients from Q2 2010.|
To say the least, we are excited that a study like this, which requires many disparate data points, has finally come together. Here’s a few highlights for those who haven’t read the paper:
- The percentage of consumers consulting reviews at TripAdvisor prior to booking via a hotel's website has increased from 28% in 2008 to 36% in 2010. The quantity of reviews they are reading has gone up, too.
- An increase in review scores by 1 point on a 5-point scale allow a hotel to increase its rate by 11.2% while maintaining the same occupancy or market share
- A 1% increase in a mid-scale hotel’s online reputation score leads up to a 0.89% increase in ADR, an occupancy increase of up to 0.54%, and up to a 1.42% increase in RevPAR
- This effect is greatest for economy and limited services hotels and least for luxury properties
1. Reviews Matter More for Limited Services Hotels vs. Luxury (If You Don't Count On-site Spend)
|"GRI Elasticity", by Chris K. Anderson of The Center for Hospitality Research|
Although not in the table above, Mr. Anderson shared with us via email that the trend is even stronger still for limited service and economy hotels. (He excluded this data because his sample size for the study was too small to include.)
2. TripAdvisor is Still the Review King (But Watch Out For Google)
Thoughts for luxury hotels: Google is the perfect home for the activity-level reviews that I described in point #1, above. The rapid adoption of mobile usage drives behavior to "search nearby" and to check in to (and review) increasingly small/obscure places (like specific beach cabanas or a specific swimming pool). Driving reviews of these activities provides utility to your guests and provides a second level of search optimization for your hotel.
3. Increasing Your Review Scores by "X" Results in "Y" (If You're The Only Hotel in Town)
"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."
Note: Portions of Mr. Anderson's study do rely on index scores, specifically those related to ADR, RevPAR, and occupancy. In either case, hoteliers must understand that it is the compset index score that matters, not the raw scores of their hotels in isolation.
Stand by for a "part-two" post that will share a peek into DMW'sReview Optimization Program, a strategy that describes how to obtain more and better reviews and what do to with them. It includes a focus on operations, integration with owned media assets, and the near future of reviews.
As always, please share your thoughts in the comments below and share this post with others.