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Confirming What Has Long Been Suspected - Social Media
Reviews Drive Hotel Reservations

Cornell Center for Hospitality Research Reports a 1 Point Increase
for Reviews Allows for an 11.2% Rate Increase


Ithaca, NY, November 28, 2012
 - Two new publications from the Cornell Center for Hospitality Research (CHR) at the School of Hotel Administration outline technology issues and the effects of social media on the hospitality industry. A study by Cornell's Chris Anderson confirms what hospitality operators have long suspected—social media reviews drive hotel reservations. The many aspects of social media and technology in the hospitality industry are also the focus in the first of a series of proceedings from the Cornell Hospitality Research Summit (CHRS), summarizing seventeen presentations from the October 2012 conference.

Cornell Study Documents Effects of Social Media on Lodging Industry

The hotel industry's belief that social media are driving bookings and revenue has been demonstrated in a new study published by the Cornell Center for Hospitality Research. The study, "The Impact of Social Media on Lodging Performance," by Chris K. Anderson, examines the effects of online reviews on consumers' lodging purchase decisions and the hotels' pricing power. The report is available from the CHR at no charge, at http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-16421.html.

"Anecdotally, we suspected that good reviews would allow hotels to sell more rooms at better rates, other things being equal," said Anderson, who is an associate professor at the Cornell School of Hotel Administration. "I analyzed hotel-related data from ReviewPro, STR, Travelocity, and TripAdvisor to quantify the effects of social media reviews and reputation on the hotel industry. The results showed that social media commentaries do move markets, and it makes sense for hotel operators to pay attention to their online reputation."

Anderson's study is the first comprehensive effort to quantify the impact of social media upon lodging performance as measured by bookings, occupancy, and revenue. First, he documented the increasing influence of TripAdvisor, as the number of reviews consulted by consumers prior to booking a hotel room has steadily increased over time. Second, an analysis of transactional data from Travelocity illustrated that a 1-point increase on Travelocity's 5-point scale allows the hotel to increase its price by 11.2 percent and still maintain the same occupancy or market share. Third, by matching ReviewPRO's Global Review IndexTM with STR's hotel sales and revenue data, Anderson's analysis finds that a 1-percent increase in a hotel's online reputation score leads up to a 0.89-percent increase in a hotel's average daily rate (ADR), as well as an occupancy increase of up to 0.54 percent and up to a 1.42-percent increase in revenue per available room (RevPAR).

CHRS Proceedings Highlight Technology and Social Media Strategies for the Hospitality Industry

Advances with analytics, identifying "best customers," building loyalty, improving operations using customer reviews, and social media as a management tool—these are just a few of the seventeen social media and technology presentations summarized in the first proceedings from the 2012 Cornell Hospitality Research Summit. The proceedings, "Moving the Hospitality Industry Forward with Social Media and Technology," by Glenn Withiam, is available at no charge from the Center for Hospitality Research, which produced the conference. The CHRS drew more than 230 industry practitioners and academic researchers to the Cornell campus in October 2012 to exchange research-based ideas to advance industry strategy. The proceedings are on the CHR's website, at http://www.hotelschool.cornell.edu/research/chr/pubs/roundtableproceedings/roundtable-16441.html.

Given the rapid move to mobile devices by travelers, several presentations addressed how to develop a "mobile strategy" that facilitates the use of mobile devices to make sure a hotel is noticed during a mobile search—and gets the business. Hotels must find a way to become part of guests' mobile ecosystem, in part by paying more careful attention to guest needs. Although consumers facilitate the development of strategy by sharing information, the problem is that their comments create a pile of unstructured data. For this reason, CHRS presenters gave detailed explanations of how to develop analytics for social media to extract the content from all the static. In addition to driving business, the information learned through analytics can strengthen customer loyalty and help improve operations. One particular value of analytics is that they can highlight and resolve problems with guest satisfaction that may not show up in conventional guest surveys. Hotel operators are aware that their property needs to appear near the top of web search results, and analytics can present techniques for making this happen, such as connecting the hotel with local attractions or events.

Perhaps most critically, customer reviews have now become a major discriminating point for customers' determination of a hotel's quality. Whereas price used to be used for that purpose, customers now put a greater weight on user-generated content on social media sites. Surprisingly, the fashion industry may be a model for how to use social media to promote hotel sales. People like to hear comments on how they look in a new outfit, so the issue is how to translate that kind of interaction to a restaurant meal or hotel stay.

About The Center for Hospitality Research

A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 79 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu.


Contact:

Jane Henion
607.254.8987
jmh222@cornell.edu




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