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Tripadvisor Directly Affects Rates, Occupancy & RevPar

26 November 2012
Professor Kris Anderson from Cornell University in his recent white paper ‘The Impact of Social Media on Lodging Performance’ demonstrated that online guest satisfaction has a direct impact not only on occupancy but also on RevPar and rates.The study is performed by The Center of Hospitality Research in partnership with ReviewPro, STR Global, and Travelocity; it is based on an analysis of more than 31,000 monthly observations over 2,5 years on midscale, upscale, and luxury hotels in 11 major markets in the North America and Europe.The analysis finds the following:

– The percentage of online travel shoppers consulting reviews at Tripadvisor prior to booking a hotel room has steadily increased over time,

– If a hotel increases its review scores by 1 point on a 5-point scale, then the hotel can increase its price by 11.2 percent and still maintain the same occupancy or market share,

– A 1-percent increase in a hotel’s online reputation score leads up to a 0.89-percent increase in price as measured by the hotel’s average daily rate (ADR).

– This 1-percent increase in reputation also leads to an occupancy increase of up to 0.54 percent,

– Also this same 1-percent reputation improvement leads up to a 1.42-percent increase in revenue per available room (RevPar).

This report is so important because it is the first of its kind that provides facts rather than assumptions that social media and user generated contents impact hotels occupancy, rates and RevPar.

Recently, Hotel managers became more conscious that online guest satisfaction impacts their occupancy levels; they assume that their Tripadvisor ranking will affect the number of their potential reservations. Hotel operators have realized the value of online reviews and social media as a key source of customer insight, and a tool to achieve operational and service excellence.

The report ‘The Impact of Social Media on Lodging Performance’, can be downloaded for free by clicking here.