Study reveals impact of online reviews on local revenue

US: A recent study by Womply, a business software company, has shown the correlation between reviews and revenue for lodging businesses.

Womply’s data science team conducted an in-depth analysis of transactions and online review data (from Yelp, Google Reviews, TripAdvisor, and others) for more than 4,500 hotels, motels, bed and breakfast, and similar lodging places in every state across America.

Some of the key findings include:

• Recent reviews have more value. Accommodations with more than 16 ‘fresh’ reviews (posted in the past 90 days) earn 63 per cent more revenue than average business. Additionally, businesses with 30 or more fresh reviews earn 79 per cent more than average.

• Lodging businesses that claim its free listings on one of the major review sites (e.g. Google, Facebook, TripAdvisor) average 33 per cent more annual revenue than those businesses which have not. Businesses that claim listings on at least three of the major review sites earn 60 per cent more yearly revenue compared to those that have not.

• Businesses that reply to more than 25 per cent of reviews earn 35 per cent more yearly revenue than businesses who do not respond at all. In fact, 64 per cent of lodging businesses do not reply to any reviews.

• Businesses that average 20-25 per cent negative reviews earn the most yearly revenue.

• The star-rating ‘sweet spot’ for revenue is between 3.5 and 4.5 stars.

Ellen Ford, marketing communications specialist at Womply, commented: “This study highlights how important it is for customers to be heard. Increasingly, online review forums are where people choose to share their compliments and concerns, and the data shows jumping into those conversations can only help a given hotel.”

“Hoteliers don’t need to make major changes to their daily operations to benefit from these findings. If online reviews are the new word of mouth, then local lodging businesses need to make an effort to develop their online presence. Hotels and motels are inherently local companies, but in today’s digital economy, even physical businesses need a healthy online presence to get found and chosen by customers.”

“There’s a clear, linear correlation between getting a higher volume of authentic reviews and hotels earning more money. Ultimately, hotels need to find ways to encourage paying customers to post legitimate reviews online,” Ford added.

The full study by Womply can be read here.

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