January 30, 2015

The TripAdvisor effect


While building a positive brand on TripAdvisor is important, new research found that while many think that positive reviews are most important, the sheer number of reviews can impact a hotel’s revenue per transaction. This may include the length of stay, price for hotel room, as well as amenities.

Online reviews have captured the attention of scholars and industry professionals alike. Today, TripAdvisor has become a key marketing and reputation channel for hoteliers as it houses more than 170 million reviews and opinions of travel-related businesses. They are posted from travelers all over the world and 100 new posts are being added every minute.

While building a positive brand on TripAdvisor is important, new research conducted by Dr. Edwin N. Torres and Dr. Dipendra Singh, both faculty in the Hospitality department at University of Central Florida, in conjunction with TravelClick, found that while many think that positive reviews are most important, the sheer number of reviews can impact a hotel’s revenue per transaction. This may include the length of stay, price for hotel room, as well as amenities.

According to the Study:

Stars are Important: There is a relationship between the number of stars a hotel has and the revenue it will receive per transaction. A five Star hotel on TripAdvisor will make more per transaction per room than a three Star hotel.

The Amount of Reviews Matter: The more reviews a hotel has the more money it will generate per transaction. More reviews may suggest more opportunities for those reviews to be positive. Because the numbers of reviews are important, hotels shouldn’t just focus on ranking or stars, but in encouraging their guests to write about their experiences at the property.

Hotel Rankings Do Not Equal More Revenue Per Booking: A hotel’s ranking on TripAdvisor did not have a conclusive impact on revenues. While the research looked at the relationship between a hotel’s ranking and revenues per transaction, it could not prove that there was a correlation. This may be due to the fact that TripAdvisor does not publically share its ranking algorithm, so there is no clear way to determine how hotels receive their rankings. Nonetheless, this could not be proved.

Methodology

Professor Torres looked at a sample of 178 hotels from across the U.S. The hotels were not only geographically dispersed, but they also represented different property types including large, corporate-brands and independents. Relevant information from these hotels included the number of online booking transactions, the total revenue derived from online bookings, and the average value of each booking transaction for several hotel companies. Data was collected from two months of revenue (July and August of 2013 – assessment completed Q3 2014). Information was also collected by visiting TripAdvisor and verifying the relevant information for each hotel including the hotel’s rating, ranking and number of reviews. Multiple regression analysis was performed.

TravelClick Recommendations

The research results clearly illustrate the importance of having many reviews and an increased star rating, but it also demonstrates that it’s critical for a property to be on TripAdvisor. Here are a few recommendations from TravelClick to help you property increase revenue using this important channel:

Subscribe to TripAdvisor Business Listings: It’s an annual subscription that generates direct property bookings and provides valuable marketing exposure. It will allow a property to reach in-market browsers, offer performance tracking and flexible display options, as well as generate incremental customers.

Ask Your Guests to Write a Review: Since the more reviews a property has, the higher the revenue per transaction, build a marketing campaign to stay in touch with past guests and ask them to talk about their experience at your property.

Utilize Special Offers: Entice travelers to contact you and book directly. When people search for your property on TripAdvisor, Special Offers appear prominently in the search result allowing your property to expand its visibility among people who are researching your market, putting you in the same ad space as brands.

Get the full story at TravelClick