REPORT FROM THE U.S.—Online reviews increasingly are affecting booking decisions, although not all traveler segments behave the same way, according to research and various industry sources.
Multiple studies recently have highlighted the importance of guest reviews and ratings in the booking funnel.
A study conducted by TrustYou and Donna Quadri-Felitti, clinical associate professor at New York University’s Preston Robert Tisch Center for Hospitality and Tourism, concluded that guest reviews have a significant impact on hotel conversion rates as well as the rates that travelers are willing to pay. Given equal prices, travelers are 3.9 times more likely to choose a hotel with higher review scores, the study showed. And when hotel prices are increased for hotels with better review scores, travelers are more likely to book the hotel with the higher score despite the higher rate.
A different report conducted by PhoCusWright on behalf of TripAdvisor showed that more than half of global respondents do not want to book a
room until they’ve read reviews to find out what other travelers think about the property. In addition, 87% of TripAdvisor users agree that an appropriate management response to a bad review improves their impression of the hotel, and 62% agree that seeing hotel management responses to reviews generally makes them more likely to book the hotel.
Other research shows that not all guests respond to online reviews the same way.
One such study conducted by Breffni Noone, associate professor at Penn State University, and Kelly McGuire, executive director of hospitality and travel for SAS, showed that while more business travelers reported reading reviews most of the time before they booked, leisure travelers were more likely to shy away from hotels that didn’t get the highest scores.
Business and leisure travelers “both cared about (user-generated content), but used it in different ways. … Leisure travelers would not consider a hotel with negative reviews, but with business travelers, although reviews were strong drivers of value, they weren’t deal breakers,” McGuire said.
Real-world context
Numbers often can tell one story while real world experience might tell another.
Mark Molinari is VP of revenue management and distribution at Las Vegas Sands, where the flagship hotel-casino in Las Vegas does 35% to 40% group business. He said transient guests “for sure” care more about user-generated content because their travel is more experiential.
“They’re going to demand the best experience,” he said.
Conversely, Molinari said business travelers would stay where their conference or meeting is being held and are less likely to rely on user-generated content when making decisions.
McGuire and Noone’s research tells a slightly different story, with business and leisure travelers indicating the order of importance of various factors when booking:
Business traveler: review sentiment (positive or negative); brand; aggregate ratings; price; and finally review language (descriptive or emotional).
Leisure traveler: review sentiment (positive or negative); price; aggregate ratings; brand.
“As you can see, there are some interesting differences in how these two segments assess value and make decisions, yet review sentiment is most influential for both segments,” McGuire said.
Michelle Davis, director of revenue management for Hospitality Ventures Management Group, which operates 38 mostly corporate-driven hotels, echoed McGuire’s findings. She said HVMG’s leisure customers look at reviews first, then at price and finally loyalty program affiliation. HVMG’s business travelers, on the other hand, first consider hotels in their loyalty programs, then look at reviews and finally weigh price.
Both McGuire’s study and revenue managers said there is a big difference between one negative review and a string of negative reviews.
“According to our study, a pattern of negative reviews, especially when others in the market have better reviews, would negatively impact demand,” McGuire said.
“One negative review doesn’t hurt on either the business or the leisure side,” Davis said, “as long as you’ve got a mixture of positive reviews in there.”
The next step
The next step for the industry is taking those positive and negative reviews into account when setting rates. Molinari said Las Vegas Sands isn’t quite there yet but noticed software developers are innovating in the space.
Davis said she has developed her own metrics and is taking ratings and reviews into account when determining her price positioning, although she admits her process is a bit subjective and does not rely on a specific algorithm, such as a software program might.
McGuire offers a bit of caution: “Given a pattern of negative reviews, my study indicates that lowering the price does not make up for the negative impact of negative reviews for both business and leisure travelers. When a hotel has negative user-generated content, they should not be focused on pricing. They need to fix the problem.”