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: both online and offline.
“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 , world leaders in Guest Intelligence solutions 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 Global Review Index™ 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 for hotels. Now, by tracking and improving online guest satisfaction using the GRITM, 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:
ReviewPro is the leading provider of Guest Intelligence solutions to independent hotel brands worldwide. The company’s suite of cloud-based solutions includes Online Reputation Management (ORM) and the Guest Survey Solution (GSS), which enable clients to obtain a deeper understanding of reputation performance as well as operational/service strengths and weaknesses. We provide actionable insight to increase guest satisfaction, rankings on review sites/OTAs and revenue. Visit https://reviewproblog.shijigroup.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.