News for the Hospitality Executive |
Guest Satisfaction Index: the Next Big
Measure of Hotel
Performance?
By
Daniel Edward
Craig
April 13, 2011 Traditionally, hotels have made pricing decisions based on a combination of demand forecasts, supply, operating costs, competitor activity, and gut feel. Market performance is measured in terms of indexes of occupancy, rate, and revPAR from data provided by companies like PKF Consulting and STR Global. In terms of guest satisfaction, however,
hotels have known little
about how they fare against competitors. Social media has changed that
by bringing
reviews and feedback into the open, enabling an important new measure
of market
performance: the Guest Satisfaction Index (GSI). Why important? Increasingly,
travel shoppers are bypassing traditional sources of information and
advice and
turning to other travelers on review sites and in social networks. “Online reputation management is
becoming hugely important to hotels because reviews have a direct
correlation
with demand, the holy grail of revenue management,” Corin Burr,
Director
of Bamboo Revenue in London. With over 45 million reviews to draw from,
TripAdvisor’s Popularity
Index probably provides the most comprehensive ranking system. The
index is derived
from a proprietary algorithm that takes into account the quantity,
quality, and
timeliness of reviews, among other factors. Hoteliers
can drill down further in the Owners’ Center,
where they can compare performance to competitors and the
destination as
a whole via the Customer Satisfaction Index (CSI), a Market Metrix
0-to-100 scoring
system derived from seven key review components. Recently, online travel agencies beefed up
efforts to amass reviews,
likely motivated by SEO benefits and conversion rates. A 2010
PhoCusWright survey
found that OTA shoppers who visited hotel review pages were twice as
likely to
book. But so far OTA reviews hardly represent the
wisdom of the
crowds. In recent searches of London hotels by Guest Rating on Expedia
and Hotels.com,
none of the top ten hotels listed had more than a handful of reviews.
The number
one hotel on Hotels.com had just one review—in a foreign language. A
similar
search on Orbitz produced no more than five reviews of each of the top
ten
hotels, some of them several years old. Only Booking.com offered
anything resembling
a representative sample, with between 68 and 824 reviews of the top ten
hotels
ranked by Review Score. Of course, the priority of OTAs is to sell
rooms, not to rank
hotels. Yet on TravelPost, which doesn’t sell rooms, a search of London
hotels sorted
by User Rating produced three reviews or less of each of the top ten
hotels.
The number one hotel had only one review—from 2004. Google Places,
which also
doesn’t sell rooms, lists up to thousands of reviews per property
aggregated
from a variety of sites. That positions it nicely to offer the ultimate
ranking
of guest satisfaction, but at present it doesn’t offer the option to
sort
hotels by review score. Meanwhile,
a search of top ten hotels in
London on TripAdvisor’s
Popularity Index brought up from
102 to 802 reviews per property, each with a handful of reviews posted
in the
past week. To make sense of reviews, hotels are turning
to reputation monitoring
tools like Revinate and Synthesio that aggregate, organize, and score
review data
from across the web. The information has typically not been made
available to travelers,
although that’s beginning to change. Barcelona-based ReviewPro
offers a
Quality Seal for hotels to post to their website that displays the
Global
Review IndexTM
(GRI), a 0-to-100 score derived from a proprietary algorithm that
aggregates
reviews from more than 60 travel review sites in eight languages.
Munich-based TrustYou
Analytics offers a similar seal. But few hotels display these
seals—unlike
TripAdvisor badges, which are becoming ubiquitous, at least among
properties
with rankings to brag about. Recently, ReviewPro published a list of “Top
10 Hotels in
Berlin According to Online Guest Satisfaction” ranked by the GRI. Said CEO R. J.
Friedlander, “For
the first time the hotel sector has an independent online reputation
benchmark
that takes into account reviews from reviews sites and online travel
agencies
from around the world.” The
company intends to roll out rankings
for other
cities in the coming
months. Meanwhile, San
Francisco-based
Revinate is about to introduce an internal measure for hotel clients
called the
Guest Satisfaction Comp Index (GSCI). “The GSCI is straightforward and
doesn't
use any algorithm or black box analytics,” explains Michelle Wohl, VP
of
Marketing and Client Services. “We take a property's average rating
across the
leading review sites and OTAs and compare it to its competitive set to
provide
a score. It allows hotels to see how they are doing against their comp
set in
terms of guest satisfaction.” Revinate’s index
will be
particularly helpful to hoteliers because it’s measured in the same
format as occupancy,
rate, and revPAR indexes, with a score of 100 being fair market share. The availability
of such data
paves the way for hoteliers to use reputation metrics to guide revenue
decisions,
a topic I’ll explore further in my next post.
Copyright © 2011 Daniel Edward Craig |
Contact:
Daniel Edward Craig |