REVIEWPRREVIEWPROO

Reputation drives revenue: How traveler

reviews affect hotel pricing power

Melle Cecilia Filippi MBA 2B

Webinar

What is ReviewPro?What is ReviewPro?

Founded in 2008 with the idea that social medias could be used to drive revenue growth by increasing guest satisfaction.

Today: it has thousands of hotel clients in more than 70 countries around the world

Analysis, customer intelligence, competitive benchmarking and automative reports all provide insight for action.

Daniel Edward Craig invites experts in order to discuss highlights of the research, its implications and how hotels can use these data to optimize rates, distribution channels and revenue.

Measure of guest satisfaction through guests’ reviews Competitors analysis through competitive quality index Performance measure

Three guests…Three guests…

Chris Anderson, Associate Professor in Cornell University School of Hotel Administration

Victoria Edwards, Co-founder of Buckhiester Management

Fernando Vives Soler, Global Director of Revenue management for Meliã Hotels International

What is GRI?What is GRI?

« GRI » stands for Global Revenue Index which is the « Online guest satisfaction index ».

Has more than 1,000 of clients today Can be used for any types of hotels Has the ability to analyze reviews from more than 90 OTAs and

guests reviews’ websites It takes into account a quantitative analysis or review scores

from all major OTAs and reviews’ websites.

GRI is used to track operational and service excellence as well as performance compared to direct competitors Analyze an establishment improvement over time

The resultsThe results

1st analysis from Cornell University, the 1st hospitality management program which is now world leader in this field:

Guests’ reviews and social medias used a public data showing relationship between reviews and bookings

-Impact of Users Generated Content (UGC) and social medias upon guests’ purchasing decisions and then hotel performance

Relationship between online reputation and hotel performance through three points:

- Performance (Revenue Per Available Room)- Pricing power (Average Daily Rate)- Occupancy (Demand)

Analysis of Travelocity which is a major North American Online Travel Agency

Increase in review score by 1 point (3.8 to 4.8) increases the odds of being booked by 13.5% and can increase price by 8% while maintaining probability of purchase and market share

Consistent results regarding the impacts with several other OTAs

2nd analysis from Victoria Edwards:

Develops a new synergie for the Revenue Management finding out a correlation between Marketing (demand creation), Sales (demand capture) and Revenue management (demand management).

Three generations of Revenue managers:

- Generation 1: revenue manager is the reservation manager

-Generation 2: manager more sophisticated, with more tools and more education

-Generation 3: Actually combines all the elements, being the most efficient

Customer purchase is based on Value Value = Price + Product (service and quality)

You can compare your hotel value with the competitive set Indexes from review sites provide pricing signals

You have to dedermine the « weight » you place on metrics provided by reputation management reports: how to use these metrics?

Value rating on TripAdvisor, Expedia… The quality of value index will be a driving force to your pricing decision

- Compare variance month over month

-Compare GRI to your pricing strategy during the same period (rate shopping tool)

- Compare your STR index balance to GRI

- Compare your GRI with the competitive set GRI

- Compare your forecast occuracy with your GRI variance

- Drill down to see how your rooms score

-Look at all of these metrics in terms of forward looking indicators such as the rate shopping tools and the predictive forecast sites

3rd analysis from Fernando Vives Soler: Case study of Meliã Hotels International

You have to identify the RM tools you can use to have a competitive advantage within a hospitality market more and more challenging and competitive

Challenging times because the demand isn’t really growing except in the Middle-East and North Africa

How to push the hotel pricing policy?

Use the new performance indicator such as the « Quality Penetration Index » (QPI) instead of the traditional and former performance indicators (Market Penetration Index, Average Rate Index, Revenue Generator Index…)

QPI= Global Review Index of my hotel / Average Global Review Index of the competitive set

Key takeawaysKey takeaways

Reviews drive revenue

The Revenue manager role must become more and more strategic and analytical

Review metrics must be integrated as a key component of revenue management strategy

Comparison of your review index (with rate, occupancy and RevPar indexes…) is paramount to maximize revenue and stay ahead of competition (finding optimal rates, positioning in the marketplace…)

ConclusionsConclusions

Controlling your online reputation is definitely essential and ReviewPro is a great tool to help you do that. Through this competitive tool, you have the opportunity to react more quickly to guests’ feedbacks and find solutions when it is needed.

In a word, revenue is directly linked to reputation as a good online reputation with positive guests’ reviews has a positive impact on demand, guest satisfaction and, finally, revenues.