US: A new report from the UCLA Anderson School of Management has highlighted how online guest reviews are helping independent properties win business from large hotel chains.
Brett Hollenbeck, an assistant professor at UCLA Anderson School of Management, studied hotel revenues and reviews, and found that while chain hotels still have more sales than independent ones, the margin is narrowing considerably, largely driven by the growth of online reviews and ratings. Independent hotels got more of “a revenue bump” than branded hotels from factors such as the number and types of reviews they receiv
The surge in online reviews has resulted in much more information being available about independent properties, said Hollenbeck, meaning that brand recognition doesn’t carry nearly the same weight it used to.
Hollenbeck looked at hotel revenue over 15 years and analysed numerous aspects of 1.5 million reviews from multiple platforms.
Branded hotels’ lead in revenue over independents has declined to 19 per cent in 2015 from 32 per cent in 2000, he found. After controlling for a number of other factors that might affect sales, Hollenbeck found that online reviews had a large effect in narrowing that gap.
For instance, if an independent hotel gets 10 reviews on average, this translates to about 1.7 per cent higher revenue, while for a chain it increases revenue only by 0.7 per cent, he said.
Interestingly the effect was felt less in urban areas – in small markets, the revenue advantage enjoyed by chains fell to 6.9 per cent from 25 per cent. In medium-size towns and suburban markets, the drop was to 13.7 per cent from 33.4 per cent. In denser urban areas, it dropped to 25.9 per cent from 34.5 per cent.
The report said that the brands that lost the most of their revenue edge were well-known players in the economy to mid-market sectors, and included Best Western, La Quinta, Super 8, and Motel 6.
The effect is felt much less keenly by higher-end chains, which benefit from loyalty-points programs and luxury amenities that lure in customers, said Hollenbeck.
To emphasise the importance of guest reviews and feedback to independent hotels, we have joined forces with leading guest feedback and online reputation management specialist GuestRevu and renowned hospitality management institution Glion Institute of Higher Education, to launch the BoHos – the Boutique Hotel Guest Experience Awards.
The BoHos will reward the boutique, lifestyle and hybrid hotels who provide the very best in guest experiences. The awards will be unique in that the winners will be decided, not by judges, but by the hotels’ guests, using a combination of aggregated verified guest feedback from review sites and booking engines worldwide, and direct guest feedback via questionnaires. Each will have a 50 per cent weighting in a hotel’s overall score to give a true picture of the guest experience provided.
The award winners will be announced at a presentation ceremony on the first evening of this year’s Boutique and Lifestyle Hotel Summit in London. And the following day there will be a panel session at the conference discussing guest reviews and reputation management. Click here to see the Summit agenda, and here to book tickets for the BoHos ceremony and the Summit.