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Gone are the days of guests planning a trip to a new city and choosing where to stay based solely on personal recommendations or a guide book.

In a connected world, it takes only a few seconds to pull up reviews of the hotel that they’re thinking about staying in.

With quick and easy access to a multitude of opinions, people can make an informed decision by reading reviews left by previous customers.

As consumers, this is a blessing.

For hotel commercial teams, it can present both challenges and opportunities. In the hospitality industry, we intuitively know that happy customers are good for business, even more so if these customers voice their positive opinions about your hotel online.

In this article, we are putting intuition aside, as we delve into recent research exploring the powerful influence of online social proof on hotel reservations.

We'll examine the relationship between a hotel's online reputation and its Revenue Per Available Room (RevPAR), and provide strategic insights on enhancing yours.

A direct correlation between online reputation and hotel revenue

A 2023 purchase study report published by Expedia revealed: ‘while price is a top consideration across all booking types, ratings and reviews are more important to hotel guests than other travelers’, such as those just booking flights or experiences.

For hotel guests, ratings and reviews were a top five consideration, with 30% of respondents taking this into account.

It’s now a fact of the digital era that the better your reviews, the higher up you’ll appear in search results, across Google, review sites, and OTA and metasearch.

The same Expedia report also found that 61% of hotel guests looked at an OTA before booking on a hotel website.

So, given the important role that online reviews play in the booking process, it is unsurprising that there is also a direct correlation between online reputation and hotel revenue.

In the Journal of Modern Hospitality, they found that ‘online reviews serve as a potent mechanism through which potential guests gather information, make booking decisions, and form perceptions about hotels.’ And as a result hoteliers should, ‘leverage online reviews as a strategic tool for improving their performance in an increasingly competitive hospitality industry.’

This is backed up by another piece of research in the Journal of Marketing which looked at real-world reservation data from a leading hotel chain's properties, spanning six distinct markets across the United States.

The evidence indicated that, ‘not only a hotel’s own reviews but also its competitors’ reviews have a significant impact on the hotel’s booking performance.’

It seems plain to see that hotel guests use and value online reputation and reviews in the booking process, which in turn has an impact on booking performance. But, will consumers pay more for a highly-rated hotel than a lower-rated property?

Well, another highly respected and often referenced study carried out by the School of Hotel Administration at Cornell University shows that reviews on TripAdvisor can cause rate swings of up to 10%.

In other words, properties with good reviews can charge 10% more than those with worse reviews.

Properties with good reviews can charge 10% more than those with worse reviews.

In addition, our earlier mention of RevPAR in the introduction isn’t purely academic.

A quick Google of ‘what is the most important metric for hotel revenue managers?’ will return millions of results, most of those on the first few pages indicating the dominance of RevPAR, viewed by the majority of professionals as a more critical measure than occupancy, ADR, GoPPAR, and other metrics.

As we have outlined above, more positive reviews can result in a lift in your room prices which can directly influence your RevPAR. If you have any doubts, look at the following example:

A hotel with negative reviews is charging $400 per room per night, and a competitor with positive reviews is asking for $440. Each hotel has 100 rooms, which means the hotel with positive reviews could make $28,000 more per week than the one with negative reviews.

Project these figures for a year and the difference in room revenue could be as much as $1.456 million. Who wouldn’t want to add that much money to their total room revenue?

That being said, it can be a challenge getting customers to leave reviews.

Human nature dictates that people are most likely to post if their experience is significantly different from their expectations, whether favorably or unfavorably. We might therefore conclude that most online reviews involve extremes.

However, research using Tripadvisor data shows that encouraging guests to review your hotel is positively related to the number of reviews posted, and that these reviews are typically better than those posted without incentive.

As with many aspects of life, it’s one thing being aware of a correlation and quite another getting it to work for you.

How to build an online reputation that maximizes bookings

With that in mind, we have drawn up some actionable tips that can help you turn good online review scores into higher RevPAR.

Here’s how you can go about building an online reputation that improves the bottom line for your property:

  • Work hard to have happy guests and encourage them to leave reviews on large distribution channels such as Booking.com and Expedia.

    Whether with follow-up emails direct from the hotel or via in-app-generated messages, targeted social media ads, mentioning this in person on departure or with signage on the front desk, and letting them know where you’d like them to leave reviews and how easy the process is.

  • Use guest review analytics to analyze and fine-tune your revenue, marketing and distribution strategies. Test new ideas out. See what works and repeat - see what doesn’t work and adjust.

  • Respond to your negative online reviews. Research shows that online ratings improve more substantially in connection with constructive responses to negative reviews, than simple acknowledgement of positive comments.

  • Do other aspects of your online presence match – and potentially encourage – reviews? Check that any photographs associated with your hotel are up-to-date and paint you in the best light, whether on your own website or on OTAs’ sites.

  • If your operation is big enough to have dedicated market managers, use those people to monitor feedback on the various channels you appear on and gather regional intel that you feed into and can inform your review-generating efforts.

  • Take notice of what your guests are saying. Are there frequent complaints that you can turn into an advantage? If an expensive breakfast is a common gripe, for example, launch a takeaway breakfast at a lower price point and mention it in your review answers.

  • Make sure that your hotel description and profile matches – or exceeds – guest expectations on distribution channels, thereby increasing the likelihood of repeat visits and new guest reviews.

  • If you’re responsible for more than one property, prioritize your activity on properties that have zero reviews. A property with no reviews speaks volumes to prospective guests.

Capitalizing on your reputation to generate further revenue

Word-of-mouth marketing has stood the test of time and if used correctly is a potent tool in a hotel marketer's arsenal.

Therefore, you won’t be surprised to hear that among the most effective methods in leveraging your positive reviews in an attempt to drive greater revenue is by strategically integrating positive user-generated content into your marketing initiatives.

Incorporating customer testimonials and reviews into your website, promotional materials, social media platforms, and email campaigns, for instance, can significantly amplify the positive social proof you’ve generated and your brand's credibility as a result.

On the revenue management side, to identify opportunities for price adjustments that your online reputation has facilitated, it's crucial to benchmark your hotel's review scores against those of your competitors.

Our market-leading rate shopping tool, Rate Insight, lets you see your online guest review performance against your competitors. Moreover, it allows you to monitor changes in your ranking on major OTAs and TripAdvisor, on a weekly or monthly basis.

If your reputation is better than your competitive set's, a moderate rate increase is unlikely to lead to reduced occupancy, instead bringing you increased RevPAR.

By combining your ranking with review scores and demand trends for specific dates, you can make more informed decisions about your room rates.

This comprehensive approach ensures your pricing strategy is both competitive and profitable.

Final thoughts

Stellar reputation management can have huge benefits for your property’s performance. Especially in this digital age where the power of word of mouth has flown to new heights with websites like Tripadvisor.

Maintaining and leveraging your online reputation has become crucial in today's digital landscape. Key metrics like rankings and review scores are not mere vanity figures, but valuable insights that can drive operational and commercial decisions.

However, to truly unlock the revenue potential of your reputation data, it must be synthesized with precise demand and competitor rate insights. This comprehensive view gives you a competitive edge, empowering you to make the most of your online reputation.

At Lighthouse, we provide the hospitality industry with the tools to do all that and more.

Get in touch and find out how we can help you improve your bottom line today.

About Lighthouse 

Lighthouse (formerly OTA Insight) is the leading commercial platform for the travel & hospitality industry. We transform complexity into conÞdence by providing actionable market insights, business intelligence, and pricing tools that maximize revenue growth.

We continually innovate to deliver the best platform for hospitality professionals to price more effectively, measure performance more efficiently, and understand the market in new ways.

Trusted by over 65,000 hotels in 185 countries, Lighthouse is the only solution that provides real-time hotel and short-term rental data in a single platform. We strive to deliver the best possible experience with unmatched customer service. We consider our clients as true partners—their success is our success.