Revenue Management in the Social Digital Age: The Impact of Reviews on Pricing.
By Rachel Grier - Exclusive for 4Hoteliers.com
Wednesday, 25th May 2016

Exclusive Feature: Online review sites and social media platforms were once relegated to the periphery of a revenue management strategy and handled exclusively by the public or guest relations department.

Today, they have become so integral to hotel pricing that entire software systems are being developed to manage and review the enormous influx of social media data hourly. 

In today’s digital ecosystem, hotel guests have more buying power than ever before. The online world boasts various websites and social media channels that offer consumers an array of informed and blunt opinions.

Guests no longer rely on directly knowing someone who stayed at a hotel to form an impression of the property and whether to book or not. Guests have powerful social media platforms where they can communicate instantaneously to wide groups of potential customers about their experiences " the good or the bad or the ugly.

This has significant implications for a hotel’s online reputation and can directly impact the hotel’s approach to revenue management, pricing decisions and ability to attract the right guest for the right price.

Hotel pricing strategies throughout 2016 and beyond will increasingly need to accommodate social media sentiment and online reviews, not only by showing this social data for interpretation but by also integrating it into pricing and revenue management decisions from the outset.

Social media, online sentiment and reviews must be accounted for in pricing decisions to maximise profitability.

Value transparency

The emergence of social platforms and value transparency of consumer goods allows prospective guests to consider a hotel’s online reputation " and even prioritise it over price " when determining the value of their choices. One of the leading research studies by SAS® Institute on how online reputation impacts hotel pricing indicates that “reviews are the most powerful value indicator for consumers*.”

This important distinction clearly indicates that the long-held consumer perception of ‘price equals quality’ no longer holds true.

The impact of guest interactions in an online world

Each guest experience can be deconstructed down to the efforts put forth from a single hotel employee, and their individual contribution to guest satisfaction. Those experiences leave a lasting impression, be that a positive or negative encounter, and can find their way online to shape the opinions of other potential guests about their likely experiences at that property.

Social media posts, as well as trip advisory sites, offer hoteliers the ability to find out what customers are saying about multiple aspects of their business. This feedback can relate to the service, brand, product or even the perceived value for money for of a hotel. Understanding the perceived value of a hotel is a critical factor in marketing and pricing a hotel - as a customer's value perception of a particular property directly impacts its ability to capture demand.

Social media feedback also allows hoteliers to gain insight to their market position. It also provides insights at a granular operational level: what is working and where the biggest problems lie. This helps identify whether slow check-ins are a common complaint, the food and beverage is over-priced, or even if the décor needs an upgrade.

Reputation pricing advances

Access to online reputation data has become increasingly more accessible to hotels. There are now pricing solutions on today’s market that display a property’s reputation and rate in relation to their competitive set.

This is called reputation pricing, and it offers hotels a powerful method of utilising online reputation data in hotel management. It enables hotels to utilise the benefits of peer-to-peer social technologies to influence the intent to purchase at the point of decision making.

Revenue management systems that incorporate reputation pricing modules utilise graphical tools that help hoteliers visualise their market position in relation to both rate and reputation. The correlation between a hotel’s rate and reputation over time helps identify new pricing opportunities, especially every time there is a visible positive change in relative trends of rate and reputation.

Reputation pricing becomes even more powerful when this data is incorporated into both the demand modelling and optimisation processes, rather than utilised as post-decision support.
Working together to improve reputation and enhance revenue

Hotels have long-incorporated rate shopping and competitive pricing in the execution of their revenue management strategies. However, competing on price alone is not a winning strategy. It is critical that revenue mangers integrate the impact of guest ratings and reviews into their competitively priced offerings.

In an age of big data and value transparency, hotels must ensure collaboration between departments to ensure positive guest experiences are amplified, negative feedback is actioned and all revenue opportunities are maximised.


This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.

Rachel Grier is Managing Director Asia Pacific for IDeaS " A SAS Company


Global Brand Awareness & Marketing Tools at 4Hoteliers.com ...[Click for More]
 Latest News  (Click title to read article)

 Latest Articles  (Click title to read)

 Most Read Articles  (Click title to read)

~ Important Notice ~
Articles appearing on 4Hoteliers contain copyright material. They are meant for your personal use and may not be reproduced or redistributed. While 4Hoteliers makes every effort to ensure accuracy, we can not be held responsible for the content nor the views expressed, which may not necessarily be those of either the original author or 4Hoteliers or its agents.
© Copyright 4Hoteliers 2001-2024 ~ unless stated otherwise, all rights reserved.
You can read more about 4Hoteliers and our company here
Use of this web site is subject to our
terms & conditions of service and privacy policy