How do Reputation Scores and Revenue Management Influence each other?

“Several surveys show that ratings influence the buying decision of customers; especially for longer stays. Personally, it does too as I always read reviews before making a booking and even use filters for review scores. Surveys, trials, and tests are showing that there is a direct relation between reputation scores and better RevPar as well. The better the reputation score, the more likely the customer will be willing to pay a higher price.

Reputation scores are influencing the pricing decision in various hotels nowadays. For example, hotels compare their score to that of their compset to make a pricing decision: if they have a much higher reputation score compared to the competition, they will have a tendency to increase their rates and would be able to do so without losing on occupancy. There are also reports showing that higher reputation scores not only affect leisure travellers but also result in the hotel getting more groups and more negotiated rates for corporate, for example.

However, each property has to analyze its own data, trends, compset and keep testing to see what works best for them. It is also a good idea to use reviews to make decisions about packages and pricing for example and improve the offerings.”

“I certainly see a link between reputation scores and revenue management. There is a developing intrinsic connection over the last few years and moving forward, where the guest is shopping reputation as much as price. From the guests’ perspectives, they’re asking themselves: is there value for money? Am I going to get what I booked?

Reviews from previous guests gives them the insight into what they are going to experience. Do I book that suite? Or wait until I get there?

The connection after-stay to keep that guest is even more pivotal with repeat guest offers, but also to maximize on total revenue management. Using a reputation management system effectively, driving on feedback and experiences within all departments, will allow a revenue manager to dive into greater analysis. With the spa, for example, what packages, value adds etc., can be used to drive revenue spend and overall increase in TrevPAR?

Reputation management is very much not just an operational piece anymore and any RM needs to be one of the key drivers of its use but also take actions themselves.”

“It’s a funny and provocative question that provokes the biggest clash in our job. Will an increase in price generate a decrease in reviews? Will the latter create a decrease in the will of the client to book our hotel? Will I be losing profit if I sell lower than I could just because I don’t want my review score to drop? What’s a good review score for my property, should we all just aim for the 10? Should I treat “better” (priority in room upgrade and VIP services) the clients that come from a platform that has a public review system?

Of course, all of us can measure that a good increase or decrease in reviews will impact the prices that we are selling. There are countless cases of hotels that have steady growth, letting price push the service or reviews push prices.

But there are also cases of hotels that have been pushing revenue and not considering reviews with the goal to make a big refurbishment, requesting afterwards a reset on all historical comments.

Historically in my career, I have worked for a hotel that was one of the worst-reviewed hotels of its category in the destination, and by far the worst hotel in our compset, but at the same time, it had the highest MPI and the second-highest ARI in the compset, being a true “Cash Cow”. The hotel was then fully refurbished, prior reviews erased and started off like a completely new property with higher prices and better quality reviews. If the drive hadn’t been revenue, full renovation would never have been possible and the turnaround of the reviews would have taken years and years.”

“There is a famous study done by Cornell University and Review Pro that found that an increase in GRI brings an increase in RevPar. With all respect, I have some doubts about the use of this correlation because in a very globalized world, any change could affect your pricing strategies, so it’s very complicated to understand this correlation mathematically.

For sure, an increase in the quality of your service brings you better results, but for me, it’s difficult to prove that with numbers; there are a lot of factors that can impact your ADR or RevPar, etc.”

“My favorite resource to answer this question is the book “Hotel Pricing in a Social World: Driving Value in the Digital Economy” by Kelly McGuire. It’s a very thorough resource on understanding the connection between user-generated ratings and reviews, and hotel pricing.

1. Academic research, while limited, has consistently shown two relationships.
2. Higher ratings and more positive reviews allow hotels to achieve a higher room rate.

However conversely, higher room rates lead to increased expectations which often result in less favorable reviews and ratings (expectation theory).”

“Reputation scores are very much linked to pricing strategies. If your property is continuously getting more negative reviews than your competitors, you will not be able to sustain the high pricing in the market, ultimately leading to customers not booking your property. Positive reviews very much influence decision-making and also the perceived value for money.

There are more and more customer reviews that are creating value in hospitality. The Review Score does impact market positioning and thereby contributes to your pricing strategy. It also adds different dimensions towards guest perceptions on booking your property against your competitive set.

Not only do good reviews impact your pricing strategy but also replying to both good and bad reviews adds value to the property. E.g., one of your properties had a review score of 66% and this was because the management responses were not 100%. Once they started achieving a reply score of above 90%+, they increased their review score significantly. This helped in more conversion % at a higher ADR, achieving a higher RevPAR overall. It also improves the impression of the hotel.

You can achieve this by keeping the team focused on issues and empowering them to make the right business decisions.”

“There are various studies proving that high reputation scores actually create both increased occupancy and average rate. This is actually quite logical. High reputation scores mean that the property offers a high-quality stay and of course, more people are interested in high quality (thus creating increased occupancy) and are happy to pay a bit extra for it. I think that it will get increasingly important now that we are coming into a time where inflation will mean that our guests will have a very close look at what they will spend their money on.”