How Online Reviews Affect The Revenues Generated By Hotels

According to a recent study by Brett Hollenbeck, an assistant professor at UCLA Anderson School of Management that is based on customer reviews, he revealed that while large chain hotels generate bigger revenues the margin is getting smaller. Because of the growth of online reviews and ratings, independent hotels experience increased growth in their revenue compared to hotel chains.

Hollenbeck said that online reviews will even the playing field between the hotel chains and independent businesses. Before the boom in hotel reviews, travellers usually relied on word-of-mouth recommendations and travel brochures that provide information on what a hotel guest can expect. With so much information online about independent hotels, travellers no longer rely on brand name.

In his research, Hollenbeck analysed hotel revenues for the last 15 years including numerous aspects from 1.5 million reviews posted in different platforms. The lead of branded hotels in terms of revenues over independent hotels has declined by 19% in 2015 and 32% in 2000. After controlling several other factors that have an effect on sales, Hollenbeck revealed that online reviews have a big effect in narrowing the gap.

For example, if an independent hotel receives 10 reviews on the average, this can translate to about 1.7% higher revenue. Meanwhile, a chain only gains a 0.7% increase in revenue. The greatest impact on hotels with long term, low quality ratings is generated by website reviews that are measured through AAA’s diamond ratings.

The effect of reviews do not seem to hold for the higher end chain hotels because they actually benefit from the loyalty points programs and luxury amenities that attract most consumers. However, the results of Hollenbeck’s research shows how important it is for hotel managers to ensure that the hotel gets positive reviews. Franchises have to uphold strict brand standards and the quality of the beddings, signage and lobby décor.

In Thailand where most of the hotel guests are tourists, hotels like vibrant hotel in Sukhumvit make sure that they provide their guests with a unique experience. Because of the high quality accommodations which are alongside Thailand’s best of the best, travellers review the hotel as excellent, impeccable and great.

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