August 27 2018
Posted in: Hospitality Trends

How Online Reviews Impact Hotel Revenue

Today's travelers are always checking review sites to get a broader perspective of your hotel.

Before the age of the internet, social media, online travel agents (OTAs), and online review sites, a bad review from a guest was just that, a bad review. But online travel review websites have become an important information source for travelers who increasingly rely on them to make decisions before hitting the ‘Book Now’ button.

Importance of Online Reviews

How many of us have reached for our smartphone or tablet after choosing a location to look up online reviews for hotels in the area? Travellers check review sites to get a broader perspective of your hotel; and they not only read them in ever increasing numbers (research suggests the average person reads about seven reviews before making a decision) but they trust them; a study by Search Engine Land found that 88% of people trust online reviews as much as personal recommendations. Not only that but 81% of travelers find online reviews important for a hotel and 49% will not make a reservation for a hotel that has zero reviews.

So, what hotel guests say (or don’t say!) about your property in the form of text, photos or videos influences the minds of the potential guests.

Impact of Online Reviews

Review sites such as TripAdvisor have a direct impact on revenue for hotel owners. Every month, 456 million people – about one in every 16 people on earth – visit some tentacle of TripAdvisor.com to plan or assess a trip and at present, more than 200 new posts are uploaded to TripAdvisor every minute. Research firm Oxford Economics found that TripAdvisor’s reviews and scores influenced around $546 billion of travel spending during 2017 – now that’s quite a bit of influence.

On a more granular level, some experts claim that one bad review can result in up to 30 lost reservations. A paper on the influence of online ratings and reviews found that users trust bad ratings more than good ratings. Bad ratings are trustworthy regardless of the number of reviews and good ratings are trustworthy only when they come along with a high number of reviews! On the flip side, positive reviews can transform an establishment’s fortunes. Consumers tend to shortlist hotels with better ratings and researchers studying Yelp, one of TripAdvisor’s main competitors, found that even a one-star increase meant a 5-9% increase in revenue.

In short, opinions of previous guests influence the minds of the reader and bad reviews are definitely bad for business. A hotel’s online reputation holds value for travelers and your rating will dictate the kind of revenue that can subsequently flow in for your hotel.