Question for Our Revenue Management Expert Panel:

Great hotel reviews have a powerful influence on guests when deciding to book. How does a hotel’s review score impact its pricing strategy?

(Question proposed by Massimiliano Terzulli)

Industry Expert Panel

Our Industry Expert Panel exists out of professionals within the hospitality & travel Industry. They have comprehensive and detailed knowledge, experience in practice or management and are forward-thinking. They are answering questions about the state of the industry. They share their insights on topics like revenue management, marketing, operations, technology and discuss the latest trends.

Theresa Prins
Theresa PrinsFounder, Revenue Resolutions

“Hotel reviews or a hotel’s online reputation is critical to your pricing strategy. Reviews influence customer decisions to book or not, and it also influences customers’ perceived value for money about your product. If your property consistently has a higher review score than your competitors, you can use this in your favour to price above your competitor set.

It is more important now than ever before since customers are more conscious of what they spend their hard-earned money on.”

Sandra Gannon
Sandra GannonCommercial Consultant, Revenue Puzzle

“Reviews on any platform are vital for a hotel’s success. You can only demand a certain price based on customers’ feedback. We traditionally compare our rates to the competitive set but it becomes more and more apparent that you can only charge as much as you can offer. This is challenging in the current staffing situation.

I also believe hotels have stopped pro-actively pushing reviews as they are not 100% in control. Reviews should also be looked at as a source of information and analysed accordingly and therefore priced.”

Nikhil Roy
Nikhil RoyRevenue & Pricing Manager, Key Hospitality B.V.

“Traditionally, the price has been one of the main Revenue Management tools, but of late, online reviews have also become a major influencing and deciding factor that affects a customers decision. It is proven that a hotel with a high online review score generates bookings with a high ADR. A prospective guest is more likely to read the reviews of your hotel and what other guests have experienced, than focus on the location, price or services.

If you’re at the good end of the review ratings, as a Revenue Manager you must take this to your advantage and translate it to competitively priced offerings. Further, collaboration with Sales, Marketing and Operations teams is imperative and thus gives a holistic approach to your decision.”

Krunal Shah
Krunal ShahCluster Director of Revenue, Dorsett Hospitality International

“There are more and more customer reviews that are creating value in hospitality. The Review Score does impact market positioning and thereby contributes to your pricing strategy. It also adds different dimensions towards guest perceptions on booking your property against your competitive set.

Not only good reviews impact your pricing strategy but also replying to both good and bad reviews adds value to the property. E.g., one of our properties had a review score of 66% and this was because the management responses were not 100%. Once we started achieving a reply score of above 90%+, we increased our review score significantly. This helped in more conversion % at a higher ADR, achieving a higher RevPAR overall. It also improves the impression of the hotel.

You can achieve this by keeping the team focused on issues and empowering them to make the right business decisions.”

Daniel Feitosa
Daniel FeitosaRevenue Management Specialist

“Great, realistic, hotel reviews can communicate with people interested in staying at a hotel. More and more, guests seek to know and understand trusted opinions and nothing is better than user feedback. Also, hotels’ replies are very important to understand both sides and the hotels’ environment.

These reviews are telling people why you should choose a hotel and, for me, they help to create value to the price you apply. Reviews can influence and explain the pricing strategy. It’s a great opportunity to add value to the photos and price you show on any reservation site.”

Sergio Sartori
Sergio SartoriGroup Senior Manager Revenue, Ruby GmbH

“I don’t see a big correlation between rating points and prices. It is always important to get very good ratings in order to stand out from the competition. The price decision should be dependent on the demand and the current situation.”

Daphne Beers
Daphne BeersOwner, Your-Q Hospitality Academy

“In my experience, it worked positively. With 2 hotels we were ranked in the Top 20 on Tripadvisor in Amsterdam and that enabled us to boost our public pricing. We increased rates YOY by 8%. When we dropped our ranking/scores with one of the properties, we had difficulties maintaining rates.

From what I have seen, the flipping point was around 8.7 (on a scale of 10) and 4.7 (on a scale of 5) which gave the opportunity to boost our rates. This is purely based on my personal experience, no research is done on these figures, but I can imagine that these studies are out there too!”

Tanya Hadwick
Tanya HadwickGroup Revenue & Yield Leader, SunSwept Resorts

“When we look at review scores, we typically look at how this is positioning us within the marketplace and our competitors, how easy we are for the guests to see (are we one of the first and therefore on the front page? or are we a couple of pages down?), and the demand that it generates. Therefore, it’s probably more of a billboard impact enhancing visibility and thus creating potential demand than an isolated impact on pricing.

I would suggest that it all comes down to the perceived value in a customer-focused pricing approach and the review scores can assist in achieving the desired result. The customer’s willingness to pay, based on their perceived value, can be different depending on hotel/resorts being luxury vs economy; or having a business vs leisure business mix, and the source of business, which would all need to be factored into the reviews. Those hotels that offer unique or perceived highly valued features or services are probably better able to capitalise on value-based pricing as this gives them a tactical advantage, especially if they also receive excellent guest feedback.”