Analyse online user reviews of your business and of your competitors

They examined review-based competitive effects by utilising hotel booking data at an individual booking level. 

Analysing information from six upmarket hotels in six cities over a three-year period – along with ratings and reviews from the TripAdvisor website – the researchers investigated the effects of competitor hotel prices and of the hotel’s own pricing structure.

Lessons for hoteliers and CMOs

The study offers several insights for hoteliers and chief marketing officers:

1. Both prices and online reviews of a hotel can significantly affect consumers’ booking decisions and the number of bookings a hotel receives.
2. Apart from a hotel’s own review scores, its competitors’ scores can impact the bookings – and this impact is even higher if the volume of reviews is high. Thus, hotel management must evaluate and improve their scores relative to the competition.
3. Different consumer segments show different booking behaviour based on the interplay between prices and reviews. For instance, leisure travellers are more influenced by a hotel’s prices, whereas business travellers are more sensitive to online reviews and are primarily concerned about comfort and quality. Hotel management must therefore develop or adjust their strategies according to the needs of these different consumer groups.
4. Reviews where consumers need to rely on the experiences of others to assess the quality of the hotel has more impact than a search attribute, such as ‘location’, where information can be obtained directly from a hotel’s website or some other external source. The impact of review sentiment – by consumer segment and by review content – can help hotel management and their marketing teams to understand where to direct their efforts in responding to reviews and addressing those consumer concerns.

Additionally, if the hotel’s prices are perceived as high, they may see a larg drop in bookings because of more negative reviews, or because its competitors receive more positive reviews. 

“Hotel managers must evaluate their review scores in conjunction with their prices and incorporate review scores into their marketing strategies. Although most hotel chains employ sophisticated dynamic pricing, we are seeing some initial movement towards incorporating non-price data into pricing decisions,” the researchers say.

“Our study provides empirical evidence to support the significance of the interplay between reviews and prices, and shows that this might change by consumer segment and review content.” 

You can find out more about the study here.