The Direct Impact of Reputation Management on Revenues for the Hospitality Industry

Managing the reputation of hotels in the digital era opens up multiple opportunities for strategic management, but also comes with associated risks.

The hospitality industry has turned to the online world to leverage additional marketing channels to generate bookings, traffic and sales.

But just because the primary sphere of operations and reputation management has shifted, doesn’t mean hotels can forget the vital aspect of customer satisfaction. In fact, with the turn to digital operations, hotel reputation management stands to benefit from things like newly emerging review sites, social media platforms and search engines.

Review and Revenue

For hoteliers, B&B owners or vacation rental owners, revenues are closely connected with review sites. These types of businesses aim to provide customers with an experience through a combination of customer service, atmosphere and convenience.

Ultimately, hotels and other hospitality businesses must rely on bookings, which directly reflect the sales volume. They can certainly increase or decrease a price, based on availability and demand, for a room, but revenues will mostly depend on the hotel’s reputation and whether it can attract a constant stream of visitors.

Online review sites have become grounds where reputations are built or tarnished. This is especially true for the hospitality industry. Reviews have a big impact on a hotel’s revenues and can also have a long-term effect on a website’s ranking and search engine visibility.

Studies done by TripAdvisor, show that over 50% of global respondents won’t make a reservation until after they’ve read more than a few reviews, figuring out what past visitors thought of the entire experience.

Seeing how important reviews are, responding to reviews is equally vital from a customer’s perspective. Findings within studies confirm that review responses influence a customer’s perception of the business:

• 9 in 10 users claim that if management were to follow up with an empathetic response, it improves their impression of the hotel.
• 70% of users agreed that a defensive response turns them away from booking at the respective hotel.
• And over half of the users consider that seeing responses is a better indicator than seeing none.

The key to success for managers of hotels and other accommodation facilities, is to focus on being proactive with their end customers — the visitors. Instead of focusing on the risks associated with a bad review, it’s useful to look at the emergence of review sites as an opportunity to build relationships with customers in a more direct way.