Cornell Hospitality Research: Online Reputation Directly Affects Pricing Power, Occupancy & RevPAR

New York, NY, November 16, 2012 – New research revealed today by the Cornell School of Hotel Administration confirms that online guest satisfaction has a direct impact on the financial performance of hotels. While prior analysis of online reputation in the industry has explored its impact on the sales process, this unprecedented research validates a direct link between online customer satisfaction and the overall revenue performance of hotels.

Conducted by Associate Professor Chris Anderson, the study shows that a 1-point increase in a hotel’s 100-point ReviewPro Global Review Index™ (GRI) leads up to a 0.89% increase in price (ADR), a 0.54% increase in occupancy, and a 1.42% increase in Revenue per Available Room (RevPAR). The study verifies that the impact is across all distribution channels: online and off.

“What was remarkable about the study is that positive online reputation doesn’t merely provide higher pricing power for online sales,” said Anderson. “It is correlated to higher group booking rates and corporate negotiated rates in addition to reservations made over the phone.

The findings are based on analysis of more than 31,000 monthly observations over 2 ½ years on midscale, upscale, and luxury hotels in 11 major metropolitan markets in the North America and Europe: London, Milan, Rome, Madrid, Berlin, Prague, Chicago, Los Angeles, New York, San Francisco, and Miami.

ReviewPro, the leading social media analytics company for the hospitality industry, established a partnership with the Cornell Center for Hospitality Research (CHR) in March 2012, and supports CHR’s research initiatives studying the relationship between social media and hospitality management.  The GRI was created with academics and hotel companies to provide a benchmark guest satisfaction score for individual hotels, groups of hotels, chains and hotel brands. For this portion of the study, GRI data was compared with STR hotel pricing data to understand customers’ decision-making process.

The influence of online reviews and social media has now reached an unprecedented level within the hotel industry. Hotel executives have realized the value of online reviews and social media as a key source of customer insight, and a tool to achieve operational and service excellence. Yet while this has happened, many in the industry have been undecided on the best way to measure direct return on investment from social media and reputation management. Now, by tracking and improving online guest satisfaction using the Global Review IndexTM, hotel managers and owners are able to quantify revenue growth caused by increased guest satisfaction.

The report, titled “The Impact of Social Media On Lodging Performance,” can be downloaded for free from Cornell University’s Center for Hospitality Research:

http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-16421.html

 

About ReviewPro

ReviewPro is the leading international provider of online reputation and social media management solutions to the hotel industry. Thousands of hotels in more than 70 countries, including some of the most recognized hotel brands in the world, rely on ReviewPro to better understand and improve guest satisfaction and to profit from the social web.  Clients include the Beverly Hills Hotel, citizenM Hotels, Concorde Hotels & Resorts, Corinthia Hotels, Epoque Hotels, Hotel Bel-Air, 1895 Historic Hotels Group, Louvre Hotels Group, Melià Hotels International, Millennium Hotels & Resorts, the Roger Smith Hotel and Swiss-Belhotel International. Visit http://www.reviewpro.com for more information.

 

About The Center for Hospitality Research

A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center’s 78 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit http://www.chr.cornell.edu.

 

Contact

Josiah Mackenzie, Director of Business Development

ReviewPro

josiah@reviewpro.com

+1 415-671-9629

 

3 Comments

There are 3 comments in this article:

  1. Reputation Management says:

    These are actually amazing points to follow… Thanks for sharing, I will definitely implement these points in my ORM

  2. Aaron Zwas says:

    Hi Josiah- Nice summary of this important bit of research…

    One possible takeaway from this research is that reviews impact bookings more for economy hotels. That doesn’t mean, however, that reviews matter less for luxury resorts and high-end urban hotels. They simply have a different purpose: Positive reviews of amenities like bars, restaurants, spa, golf, etc can increase the usage of those services and therefore increase per-guest revenue.

    Increasing onsite spend should be a core objective of any resort’s review program. Have a look at a recent post I wrote on the same article to learn more: http://goo.gl/zSEpV

    Thanks,
    -Aaron Zwas

  3. Pingback: Hotel Marketing Trends 2013 - EyeforTravel San Francisco | buuteeq

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