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Responding to TripAdvisor Reviews Will See Revenues Rise, Up to a Point

21 April 2016
21 Apr 2016 -

If you’re a hotelier or hotel manager, it pays, literally, to respond to online reviews, but only up to a certain point.Tripadvisor-logo

That’s what a new study from Cornell University’s School of Hotel Administration suggests. The report, “Hotel Performance Impact of Socially Engaging with Consumers,” found hotel revenue levels rise as the number of management responses to online reviews increases. However, after an approximate 40-percent response rate, there’s a point of diminishing returns.

“We see that hotel managers generally want to interact with guests who post reviews on line, but the question remains of exactly how to do that,” Chris K. Anderson, one of the study’s authors and an associate professor at the school said.

Generally, when managers respond to consumer reviews on sites like TripAdvisor, the hotel sees improvements in sales and revenue, and consumers often click through from TripAdvisor to the hotel’s listing as advertised on online travel agencies like Expedia and Booking.com.

The key, however, is to not respond too often. Managers who respond beyond the 40-percent response rate may actually see a drop in revenues and a decrease in the hotel’s online reputation or review scores. Revenues actually are lower when managers respond to more than 85 percent of reviews than if they were not to respond at all to any reviews.

“It turns out that making too many responses is worse than offering no response at all, in terms of both ratings and revenue,” said Anderson. “So, managers should focus on making constructive responses to negative reviews rather than simply acknowledging positive comments.”

Consumers are also more appreciative of responses to negative reviews rather than positive ones. Ratings for hotels improved substantially when hotel managers gave constructive responses to negative reviews as opposed to simple acknowledgements for positive comments.

The study’s authors worked with Revinate to collect data from 80 different hotels operated by five different management companies, using review data from TripAdvisor and hotel performance data from Smith Travel Research, and Fairmas, a Berlin-based market analysis software provider. To measure generated revenue from managerial responses, they looked at bookings generated on TripAdvisor with click-throughs to online travel agencies.

The study also found value in simply encouraging guests to post reviews on sites like TripAdvisor. The more reviews and the higher the online reputation or revenue scores there are for a particular property, the better the hotel’s performance in terms of price, occupancy, and total revenue.

“We ran several tests of what happens when the hotels respond to reviews posted on TripAdvisor,” said Anderson. “For one thing, simply encouraging reviews is related to an improvement in a hotel’s TripAdvisor ratings, compared to competitors.”

When hotels in the study encouraged guests to leave reviews, their TripAdvisor ranks rose, on average, from 46.8 to 42. Fifty-eight of the 80 hotels in the study, or about 72.5 percent, either maintained or increased their rankings after encouraging guests to leave reviews.

Source: Skift