The TravelClick Perspective – January 2015: The TripAdvisor Effect
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.
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.
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.
Hotel Industry Outlook Snapshot
The hotel industry outlook for the top 25 North American Markets is showing an increase of 2.8% in committed occupancy for January 2015 – December 2015, based on group commitments and individual reservations on the books as of January 4, 2015 compared to the same time last year. The group segment is up 3.4% in room nights committed (contracted). New group business added over the last month (pace) is up 3.9% over the comparable period last year. Transient room nights booked are up 0.9% compared to the same time last year. Average daily rate (ADR) is up 4.5% based on reservations currently on the books for 2015.
For the first quarter of 2015, overall committed occupancy is up 2.6% in the top 25 markets. Committed occupancy for the group segments is up 4.1% and the transient segment is up 0.6% compared to a year ago. Average daily rate for the first quarter is up 4.3% over the same time last year. Business segment ADR, which includes weekday transient negotiated and retail segments, is down -1.7%. Leisure segment ADR, which includes transient discount, qualified and wholesale segments, is up 2.6%.
The chart below shows the year-over-year position by market of committed occupancy, reserved occupancy, ADR, and revenue per available room (RevPAR), based on business on the books for the future 12 months. Committed occupancy is group blocks plus transient reservations. Reserved occupancy, ADR, and RevPAR are based only on reservations (group pickup and transient reservations). Shades of green indicate highest performance of the markets, while shades of orange indicate average performance, and shades of red indicate lowest performance.
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About TravelClick, Inc.
TravelClick (TravelClick.com) provides innovative cloud-based solutions for hotels around the globe to grow their revenue, reduce costs and improve performance. TravelClick offers hotels world-class reservation solutions, business intelligence products, and comprehensive media and marketing solutions to help hotels grow their business. With local experts around the globe, we help more than 38,000 hotel clients in over 160 countries drive profitable room reservations through better revenue management decisions, proven reservation technology and innovative marketing. Since 1999, TravelClick has helped hotels leverage the web to effectively navigate the complex global distribution landscape. TravelClick has offices in New York, Atlanta, Philadelphia, Chicago, Barcelona, Dubai, Hong Kong, Houston, Melbourne, Orlando, Shanghai, Singapore and Tokyo. Follow us on twitter.com/TravelClick and facebook.com/TravelClick.
Danielle DeVoren / Andrew Herweg
KCSA Strategic Communications
212.896.1272 / 212.896.1273