In the ever-evolving landscape of the hospitality industry, the ability to garner and maintain a positive online reputation has become paramount for hotels worldwide. At the recent FORWARD_MAD23 event in Madrid, I gave a presentation shedding light on the critical nature of guest reviews and the imperative for hotels to engage with these insights actively and thoughtfully. Drawing upon the vast expertise of the Shiji Group, I highlighted the tangible impact that proactive online reputation management can have on a hotel’s top-line revenue. As we explore the nuances of guest experiences and their ripple effects on revenue, I will summarise my presentation in this Shiji Insights article. This article aims to distil and amplify the key messages from my presentation, underlining why hoteliers must prioritise and refine their approach to managing their online presence in today’s digital-first world.
Reputation and Revenue Connection
The Global Review Index (GRI), an industry-standard online reputation score, is a critical benchmark for reputation management efforts. Cornell University used the Global Review Index to illustrate a 1% increase in a hotel’s GRI correlated with higher profitability. Specifically, a one-point increase in a hotel’s GRI can lead to a 0.89% increase in Average Daily Rate (ADR), a 0.54% increase in occupancy, and a 1.42% increase in Revenue Per Available Room (RevPAR).
Global Review Trends
The report analysed over 9,500 hotels worldwide, encompassing over 3 million reviews and 9.5 million mentions. The findings show that the Global Review Index is rising but has not reached pre-pandemic levels. The luxury segment is performing the best in this regard.
Globally, the review volume is approaching pre-pandemic levels, but negative mentions regarding room quality and cleanliness significantly impact the GRI by 1.9 and 1.4 points, respectively.
Madrid’s Luxury Segment Analysis
Focusing on Madrid’s luxury hotel segment from January to October 2023, the report notes a slight increase in GRI compared to the same time last year. The positive review percentage was 87%, with negative reviews at 5.3%. The Intercontinental Madrid and the Mandarin Oriental Madrid showed notable improvements in their GRI scores. The primary sources of review volume for the luxury segment in Madrid were Booking.com (53.4%), Google (26.2%), and TripAdvisor (9.5%).
Concerns over Price and Additional Services
A significant number of negative reviews were related to price concerns. There were 694 negative mentions about “price,” with a staggering 95.4% of these indicating that services or amenities were perceived as too expensive. This includes additional services like parking, restaurant meals, drinks, breakfast, airport pick-up, laundry services, and WiFi. This feedback indicates that guests, already paying high amounts for rooms, feel that the high prices for incidentals are excessive.
Positive Feedback on Staff and General Services
Despite the concerns over pricing, the report also highlighted positive aspects. There were 1,783 positive mentions about “everything,” indicating overall satisfaction with the facilities and services offered. Additionally, there were 3,843 positive mentions about staff, emphasising their outstanding, friendly, professional nature and willingness to solve any issues.
Critical Role of Online Reputation Management: The data presented highlights the significant impact of online reputation on a hotel’s profitability. Effective management of online reviews and ratings is crucial for revenue growth.
Recovery and Trends Post-Pandemic: While the hotel industry is recovering, with review volumes nearing pre-pandemic levels, there’s still room for improvement in reaching and surpassing these levels, especially in the luxury segment.
Localised Analysis and Benchmarking: The case study of Madrid’s luxury hotel segment demonstrates the importance of localised analysis. Hotels need to understand and react to specific trends and feedback in their geographical area.
Guest Sensitivity to Pricing: A substantial number of negative reviews are related to perceived high prices, particularly for incidentals. This indicates a need for hotels to reassess their pricing strategies to ensure they align with guest expectations.
Positive Reviews Highlighting Staff Excellence: Positive guest experiences often involve staff interaction. Hotel staff’s professionalism, friendliness, and helpfulness are critical factors in guest satisfaction.
Proactive Response to Feedback: Hotels should actively engage with positive and negative feedback. Addressing concerns and acknowledging compliments can enhance guest relations and reputation.
Balancing Service Quality with Pricing: While maintaining high service standards, hotels must also consider the impact of their pricing on guest perceptions and overall satisfaction.
Leveraging Data for Strategic Decision-Making: Utilizing data from reviews and ratings can guide hotels in making informed decisions about service improvements, marketing strategies, and operational adjustments.
Multi-Platform Management: With reviews from various sources like Booking.com, Google, and TripAdvisor, managing and monitoring multiple platforms is essential for comprehensive reputation management.
Adapting to Market Changes: The industry is dynamic, and hotels must continually adapt to market changes, guest preferences, and evolving trends to stay competitive and profitable.
In conclusion, don’t underestimate the importance of online reputation management in your hotel and leveraging review analytics to optimise marketing campaigns. While luxury hotels generally show promising trends in their online reputation, there is a clear indication that guests are sensitive to the price of additional services. Hotels must balance maintaining a high standard of service and accommodation with pricing strategies that do not alienate guests. Engagement with guest feedback, particularly in managing negative reviews, is essential for sustaining and improving the hotel’s reputation and profitability.