Marketing Coordinator

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. October 14, 2017

Can hotel reviews turn into profit?

Consumer reviews have gain great attention from the hospitality industry, since they considerably affect consumer behavior and decisions. Not surprisingly, consumer reviews also affect the hotels profitability and booking transaction value.

The consumer reviews raise hotels visibility through the numerous infomediation sites, such as TripAdvisor, HolidayCheck, Google, Yelp, Booking.com. etc. The reviews boost the hotels' ranking in the web searching results, since they refresh the hotel's online content. The greater the visibility of a hotel the greater the possibility consumers to consider it among their booking options.

Reviews are considered as a more objective and less biased way to analyze a hotel's quality, facilities, service, etc. When UGC information is provided then the consumer can easily compare and rank the hotel. Consumer saves effort and time, which remarkably affects his final choice. Consumer reviews reduct information's asymmetry when searching for a hotel, leading to increased consumer willingness to pay more about a room1.

Given that reviews raise the consumer's awareness about the hotel, the number of the reviews about a hotel is also important. More reviews, lead to a greater popularity and visibility for the hotel and, therefore, generate a larger number of booking transactions. Noteworthy, when a hotel lacks of online reviews consumers tend to not include it into their booking options2. Furthermore, as the number of reviews gets bigger the extreme reviews impact can be restricted3.

According to the consumers reviews hotels hold a ranking (usually on a 5-point scale) in the infomediation sites that also affects profitability. Hotels with better ranking show better values per transaction3. An 1-point increase in this ranking, increases by 13.5% the purchase probability of a hotel room. The same ranking improvement of one point, allows a price increase of 11.2% with no changes in the hotel's occupancy rates and market share4.

Attracting more reviews is the ultimate goal. Satisfied guests must be encouraged to post their reviews. When the hotel has a positive feedback from a customer (via email for instance) should motivate him to post his opinion online. Generally, customers should be encouraged in writing reviews about the hotel, perhaps by given them the opportunity to do so while on property. Online reviews can lead to quality bookings (better average price per online transaction). Increasing occupancy rates does not necessarily lead to better profitability. Attracting customer's willingness to pay more about a room via consumer reviews might be.

Sources:

1. Neirotti et al., 2017. Are customers' reviews creating value in the hospitality industry? Exploring the moderating effects of market positioning. International Journal of Information Management, 36, 1133-1143.
2. Varkaris et al., 2017. The influence of social media on the consumers' hotel decision journey. Journal of Hospitality and Tourism Technology.
3. Torres et al., 2015. Consumer reviews and the creation of booking transaction value: Lessons from the hotel industry. International Journal of Hospitality Management, 50, 77-83.
4. Anderson, C. (2012). The impact of social media on lodging performance [Electronic article]. Cornell Hospitality Report, 12(15), 6-11.

Konstantina Tsiakali

Marketing Coordinator

HF HotelFeedback Ltd

[email protected]

Konstantina is the Marketing Coordinator of the HotelFeedback - real time guest reviews, teaching also “New Technologies in Tourism” at the Alexander University of Applied Sciences. She has been involved for more than a decade in tourism and travel research and publications, participated in a number of related conferences and meetings. She is also the Editorial Assistant of the International Journal “TOURISMOS: An International Multidisciplinary Refereed Journal of Tourism”. She holds a Phd in Digital Tourism Marketing, a master in Tourists Satisfaction field, and another one in Hospitality Efficiency. Previously, she was Research & Teaching Assistant at the University of the Aegean and Research Assistant at the Tecnical University of Crete.