By Daniel Edward Craig
In my last post I discussed how social media has enabled a new measure of hotel performance: the Guest Satisfaction Index (GSI). Derived from guest reviews and ratings aggregated from major review sites, the GSI provides a measure of a hotel’s market share of guest satisfaction within its competitive set.
In this post I discuss how newly available reputation metrics are paving the way for the integration of the online reputation management and revenue management functions in hotels. The implications will reach beyond decisions on pricing and revenue to budgeting, staff training and bonus plans.
“Hotels are quickly recognizing the link between revenue management and reputation,” says Corin Burr, Director of London-based Bamboo Revenue. “Common sense dictates that there is a link between guest reviews and revenue performance. Of course there are many contributing factors, but to watch your Revenue Generation Index increase as your Guest Satisfaction Index increases puts more science into the instinct.”
Kelly McGuire, Ph.D., Practice Director, Hospitality and Travel Global Practice at SAS Institute, would agree. “I think there is huge opportunity in incorporating reputation management into revenue management decisions both strategically and tactically,” she says. “In recent research, we found that the sentiment of online reviews reduces the impact of price on purchase decision, meaning that good reviews will influence a traveler to spend more, and bad reviews will discourage bookings, even if the hotel room is discounted.
Analytics tools provide a range of reports to help hotels monitor and benchmark online reputation, whereas companies like TravelClick and STR provide rate, occupancy, RevPAR and market share reports. But only by integrating both types of data will hotels be able to see the whole picture and efficiently use reputation metrics to make strategic rate decisions.
“Given what I’ve been seeing in some of my research, it will be essential for revenue managers to understand their ‘satisfaction position’ on online channels as they make pricing decisions,” says McGuire of SAS. “Our social media analytics could certainly gather the information and apply the appropriate text analytics to get at the underlying sentiment that would drive this metric. We’d love to partner with a market level research provider like STR to work towards enabling this for the industry.”
By incorporating Guest Satisfaction Index data into market share reports, hotels will have a holistic view of how they’re performing against competitors: in rate, occupancy, revPAR—and guest satisfaction. GSI scores can be used to guide decisions in a range of areas: employee training and development, marketing and communications, capital upgrades, labor allocations, and services and amenities, as well as criteria for employee recognition and management bonus plans.
Aggregating and scoring review data is no simple process, however. There is no standard system among review sites for ratings and rankings, and some of the most valuable feedback is expressed in freeform commentary. To further complicate matters, a lot of traveler commentary is shared on even less structured channels like Facebook, Twitter and foursquare. Reputation monitoring tools provide sentiment analysis to qualify commentary, but much of the feedback on these channels is inaccessible, contained within a walled garden.
And who is going to wade through all the data and understand it well enough to use it to make strategic revenue decisions? Revenue managers are stricken as it is with “analysis paralysis” by the sheer volume of revenue data and metrics available. Further, reputation management is a property-wide function, making it difficult to assign responsibility to a single department.
Do hotels need to create a new position? Fifteen years ago, revenue management was a new concept in the hotel industry. Today, every hotel has a dedicated revenue manager and a revenue team that meets weekly to review reports and make strategic and tactical decisions. Has reputation management become so integral to hotel success that it’s heading in the same direction?
“I will not be surprised to see the introduction of online reputation managers in hotels seated right next to revenue managers,” says Burr. “At Bamboo Revenue we are working with a range of hotels to help them understand the link between online reputation and revenue management performance. With experts in both fields we can give a holistic, practical and hands-on approach.”
It all sounds a bit complicated and overwhelming—and it’s likely to get even more complex. Says Sloan F Dean, senior vice president of revenue and market strategy for Alliance Hospitality. “The business intelligence systems of tomorrow will need to interface with and/or integrate CRS, RMS, PMS, POS, social media, loyalty and sales data, linking all departments of a hotel with one central data source.”
As a first step, hotels can start channeling greater resources toward managing reviews and social media feedback to improve the guest experience and enhance reputation. As the relationship between reputation and revenue becomes more firmly established and integrated reporting is made available, hotels and hotel groups that act quickly to implement a structured reputation management program will likely see quick and favorable results to both reputation and revenue.
And that program could very well include the introduction of an online reputation manager to your management team.
Reputation is really important here. It's the trust to get the position it deserves.
That's really interesting… but I think its a needed position! Thanks for posting.
Another brilliant blog Daniel! I think you are right on the money! I remember when revenue managers were a luxury and now you wouldn't consider doing business with out one. The time for this new position has come. We have found that there is a beautiful synergy shaping up between myself and my revenue manager – we are more connected now than ever before.
There is huge opportunity for those who get on board with this emerging need.
Avril
Avril Matthews
Director Of Sales and Marketing
Inn at Laurel Point
Thanks Avril – glad you like. So does this mean you’re the official reputation manager for your property? I think that’s the case for many properties – the DOSM being in charge of ORM – but few are all over it like the Inn at Laurel Point. Keep it up!
Online reputation management is indeed an emerging concern, as social communities develop and expand at an astounding rate. Word is spread around faster than ever before, and every business wants that word to be good. A relevant example is something that happened to me last year when I was about to book a flight on a big-name airline and I googled that airline's name just to see what came up. Well, there on the front page of the serp was a blog post defaming the airline for their poor treatment of families, all based on one family's experience with the airline personnel. The same story had been shared on every major social site you can think of. Hence, the need for good reputation management representatives in your business.
Very interesting and needed position.
I like particullary Trip Advisor, because allows a reply from the manager (see the reviews over Casa Joao Chagas in Constancia).
Another sites dont allow any reply, which means that the hotels have no opportunity of defend the good name (imagine that a guest demands the facuility of have his pet in his room, against the hotel proccedure, and is not authorized. He makes bnegative reviews and the hotellier has no opportunity of deffend himself)
I totally agree, Luis. I think any site that carries reviews should allow businesses to respond. Social media is about open communication, after all, and owners have the right to weigh in on the conversation (or not) when their businesses are being discussed.
Our social media analytics could certainly gather the information and apply the appropriate text analytics to get at the underlying sentiment that would drive this metric.
Is the relationship between the revenue and review based on causation or correlation?
Alec, Good question, I would say both. Reputation and revenue are co-dependent: a good reputation increases demand, which in turn increases revenue. The opposite is true of a bad rep. At the same time if rates exceed perceived value that will lead to bad reviews. I’ll leave it to the mathematicians to write a formula. Anyone?
Daniel,
Great article! I have been the Online Content & Reputation Coordinator at a major resort in California for 5 months now. We have just decided to purchase a reputation management tool that I can utilize for further analysis and consolidation of all the buzz that is out there. I wanted to share my experience.
So far I have endured a lot of resistance from our general managers. Our revenue management team is only a few years old, and putting this team in place was a struggle. So you can imagine that when our Revenue Manager decided to create a Reputation Management position, getting the position budgeted was not easy. Although we have seen amazing growths in revenue since the revenue management team was put in place. I think it is difficult for older hoteliers to accept the importance of managing social media. Several assume that putting your properties out there is good enough. Of course this is not true, a properties reputation can be slandered and destroyed if we don't keep tabs on what is out there. I think the problem lies within a generational gap between Revenue Management teams and the General Management of hotels. It is an ongoing struggle to convince managers of our resorts that times they are a changin'. That being said, I am lucky that our marketing, sales and revenue management teams are showered with people of my generation, who rely on these distribution and review tools to travel, and who are excited instead of reluctant of industry change.
Please keep putting great articles and informational webinars out there. There aren't many learning resources available for us reputation managers.
From: an anonymous Online Content & Reputation Coordinator in California
Thanks for your message – I think you’re the first official Online Rep Mgmt Coordinator I’ve heard from – your hotel group is definitely ahead of the curve. I’d like to find out more and will be in touch with you soon, just as soon as I get caught up!
I'm working on a reputation management e-book I'd like to ask permission to use your article of course with credits to the source and a backlink to this post.
Shouldn’t be a problem, Arthur, but if you could send me a quick email at dec (at) danieledwardcraig.com, that would be great. thanks.
Great post I love the equation Revenue Generation Index = Guest Satisfaction Index. It's great I know a few managers in the hotel industry who a wary about online marketing because of the reviews. I'll be using that equation when speaking to them about it.
Yes, I agree. Because in today’s internet-crazy, interconnected world, having an online presence is key. It’s an image. And it is this person’s job to ensure that your hotel looks great online–as it does in the “real” world.