By Brad Plothow
October 24, 2019 — It’s no secret that the internet has completely changed how people find and book hotels. These days, half of all lodging is booked online, online travel agencies’ market share now exceeds that of direct bookings, and 96% of TripAdvisor travelers report that online reviews are a critical factor in where they decide to stay.
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. So, that got us thinking, how do online reviews impact revenue at American lodging businesses? Not just in the abstract, but in terms of actual dollars and cents.
To answer that question, the data science team at Womply analyzed online review and transaction data at more than 4,500 hotels and motels nationwide. The resulting Impact of Online Reviews report reveals three online blind spots that may be costing hoteliers money — and actionable steps to fix them.
Too many hoteliers are ignoring their free online listings
If online reviews are the new word of mouth, then online business listings are the new window shopping. Every day, millions of consumers type a query into their smartphones and browse the resulting business listings from Google, Yelp, TripAdvisor, and more.
Every legitimate business is listed on these kinds of sites, whether they actively create a listing or not, and claiming your listing is free. It seems obvious, then, that hotel owners and operators would claim and manage these listings to ensure they put their best foot forward.
Unfortunately, that’s not the case. According to our research, 1 in 5 hotels has not claimed listings on any review sites. That’s a huge missed opportunity, and it shows in the analysis:
- Lodging businesses that don’t claim their listings on any review sites earn 32% less revenue than the average hotel.
- On the other hand, lodging businesses that claim their free listings on at least three review sites earn 60% more revenue than businesses that don’t claim any.
This is especially true when it comes to Google, which is increasingly the first stop for consumers searching for any local business or service. People use Google Maps more than any other platform to find hotels on the road, and it shows in the data, with hotels that fail to claim their Google My Business listings earning a whopping 40% less than the average lodging business.
The simple takeaway is this: if you operate a hotel or motel, be sure to claim your free listings on review sites.
Lodging businesses aren’t engaging with their customers online
If a customer walks into the hotel lobby and starts shouting complaints (or showering you with praise, for that matter), would you and your staff ignore him? Of course not.
Nevertheless, hoteliers are doing the digital equivalent of ignoring engaged customers every day. Our online reviews study revealed that 64% of lodging businesses do not respond to any online customer reviews. Let that sink in: nearly 2 in 3 hotels have customers giving feedback online but receiving no response. That’s the online equivalent of ignoring that shouting customer in your lobby.
Here again, failure to engage with customers online correlates to poor financial performance. Lodging businesses that don’t respond to any online reviews earn 10% less than the average hotel, whereas those who respond to no more than 25% of all reviews earn 9% more. Hotels that go the extra mile and respond to more than 1 in 4 of reviews earn 35% more.
It might seem trite, but customers want to be heard and acknowledged. Increasingly, online review forums are where people choose to share their compliments and concerns, and the evidence is mounting that simply responding can lead to more money. And, unfortunately, the opposite is also true.
The good news is it doesn’t take much effort to stand out, since most hotels are staying silent instead of leaning into online reviews.
Hotels need to get more reviews
At Womply, we regularly speak with local business owners and operators who are afraid of online reviews. They don’t like the fact that anyone can post any commentary they want about their business.
I get it, but the truth is that people have been saying good and bad things about businesses behind their backs for a long time. At least now the business actually gets to be part of the conversation. In addition, it turns out that customers don’t expect you to be perfect. In fact, hotels with 5-star ratings actually make less than those with lower ratings, according to our research (3.5 to 4.5 stars is the sweet spot).
So, if you’re concerned that asking customers to leave online reviews will spur a ton of negative feedback and crush your star rating, don’t be. First of all, reviewers are actually quite kind to hotels, with only 15% of all lodging businesses falling outside of the 3 to 4.9-star range. Second, getting more reviews is perhaps the best way to increase revenue.
Our study found that the average lodging business has 151 online reviews across multiple sites. Hotels and motels with less than that number make 25% less revenue, on average, whereas those with more reviews earn an astounding 62% more in average annual sales. Furthermore, hotels with more than 300 reviews earn 87% more.
There’s a clear, linear correlation. More reviews, more money.
Consequently, hotels need to find ways to encourage their paying customers to post legitimate reviews online. It’s important not to game the system with fake reviews, buying reviews, or encouraging only positive reviews. Our study found evidence that inauthentic reviews or ratings actually correlate to poorer financial outcomes, suggesting that consumers have sensitive antennae for authenticity.
In our experience, the best way to get customers to post reviews is simply to ask. It doesn’t require much effort, and it can pay big dividends.
If you run a hotel or motel, it’s time to realize the impact of online reviews on the hospitality industry and adjust accordingly. Thankfully, there are some simple, actionable steps you can take today that could lead to big returns.
Click here for the full study.