Higher review scores drive hotel pricing power: study

A recent study by Cornell University found that an increase in a hotel's user review scores can positively influence the relationship between price hike and demand as higher review scores allowed hotels to charge more while maintaining occupancy rate.

The study also showed that as a property's social reputation improves, its overall performance also improved. A stronger online reputation allowed a hotel to increase its prices while maintaining the same occupancy levels and the rating increase therefore leads to higher revenue and improved performance.

Sharing the results of the study by Associate Professor Chris Anderson at Cornell University's Centre for Hospitality Research, TripAdvisor said the findings supported research published by the travel site on how essential online traveller reviews have become for hotels.

In a first attempt at determining the impact of social media and reviews, the study validated a direct link between online customer satisfaction and the overall revenue performance of hotels.

Data from ReviewPro, STR, Travelocity, comScore and TripAdvisor were combined to show social media's growing influence on the consumer research process and how this influence, in turn, can impact a hotel's ability to set prices, drive occupancy and increase revenue.

The study found how hotel reviews play an important role in travellers' decisions when booking a hotel. According to an earlier study conducted by PhoCusWright on behalf of TripAdvisor, 53 per cent of respondents stated that they would not book a hotel that did not have any reviews on the travel site, and 87 per cent of users agreed that TripAdvisor hotel reviews helped them feel more confident in decision-making, said TripAdvisor.

The Cornell report also showed that an one-fourth of TripAdvisor visits occur in the last five days prior to reservation booking – a pattern indicating that user reviews are one of the final criteria in the hotel booking process. Additionally, those who are already using the site are returning more often and all users are viewing more reviews before making hotel choices, stated the site.

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