This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.  Find out more here  Close
Study: Business travelers value reputation
July 7 2014

According to a study presented at HSMAI’s ROC, the sentiment of reviews is the most important factor in business travelers’ booking decisions.

Highlights
  • Business travelers will put up with “good enough” just to earn points as members from loyalty programs, according to the study.
  • The results of this study give smaller hotel brands some hope, said Loews Hotels & Resorts’ Monica Xuereb.
  • Pricing is not the “be all end all” of a consumer’s decision, said Xuereb.
 

LOS ANGELES—As revenue management moves from the traditional inventory optimization model and into the world of price optimization, hoteliers need to better understand consumers’ willingness to pay, said panelists during the Hospitality Sales and Marketing Association International’s Revenue Optimization Conference.
 
During a panel titled “Reputation’s influence on pricing,” Kelly McGuire, executive director at hospitality and travel global practice for SAS Institute and member of HSMAI’s Revenue Management Advisory Board, shared the findings of a recent study she co-authored with a professor from Penn State University.
 
The study looked at how reputation and price affects consumers’ purchasing decisions, McGuire outlined. For the purpose of this study, she and her co-author focused on the business traveler but also used a previous study they worked on together as a comparison, which focused on the leisure traveler booking patterns.
 
“It is actually crucial these days to understand all the factors that may influence the willingness to buy so that as revenue managers, we can make the right pricing decisions, both tactically and strategically,” McGuire said. “We look at our business in terms of our demand forecast and our pricing, but consumers buy a little differently.
 
“They’re looking at our price and our competitor’s price, but they’re really assessing value and quality. They want to understand the trade-off,” she said.
 
Digging in
McGuire and her co-author surveyed more than 500 United States’ business travelers, asking them to choose from three hotels all in an equally good location, that had the same basic amount of service and the same amenities. The variables were the hotel brand and three different attributes of reviews, she said. The researchers screened for business travelers who traveled at least six times a year and who made their own reservations. 
 
The study varied review sentiment (positive or negative), language (very emotional or descriptive) and content (about the room or service within the hotel), McGuire said.
 
The researchers then looked at one additional element: loyalty programs.
 
“Because we knew that loyalty program membership likely played a pretty strong role in, or could, in a business traveler’s decision, we added a third level to that brand attribution, which was a preferred brand,” McGuire said. The three hotel choices included an unknown brand, a brand they would have been familiar with that wasn’t their preferred brand and then their preferred brand.
 
McGuire said the typical surveyed business traveler on average had 2.38 loyalty memberships, and about 45% of them belonged to a loyalty brand that was not from a traditional hotel brand, so either one of the online travel agencies or something like Preferred Hotels. 
 
The results? Of the business travelers surveyed, the sentiment of reviews had the highest impact on choice followed by brand, ratings then price and lastly, the language of reviews. Leisure travelers cared most about sentiment of reviews, followed by price, rating, TripAdvisor rank and brand, according to McGuire’s previous research on leisure travelers.
 
McGuire shared the following key takeaways from the business traveler study:
 
  • Reviews matter. Business travelers want to know what the experience will be.
  • Loyalty membership is key. Business travelers will put up with “good enough” to accrue points.
  • Business travelers still recognize a deal.
 
From the hotelier’s perspective
The results of this study gives smaller brands some hope, said Monica Xuereb, VP of revenue management at Loews Hotels & Resorts.
 
“Even when you’re up against these ubiquitous massive loyalty programs, online reputation can really have an impact,” Xuereb said. 
 
She said pricing is not the “be all end all” of a consumer’s decision, so hoteliers need to take a step back and look at where they stand from a reputation standpoint versus the same competitors.
 
“One of the things we’ve done at Loews is we’ve just started to put a lot more focus on (reputation management), and this has given us a little more confidence in pricing,” she said, adding that demand is good this year and it is a good time for hoteliers to take a chance.
 
Xuereb said Loews is starting to get the revenue managers more involved in looking at reputation-management data. She said that earlier this year, Loews partnered with Ideas to collect reputation data from 17 different OTAs to conduct beta testing, she said.
 
Xuereb said like most hotel companies, Loews has some revenue managers who override the revenue-management system, so she wanted to see if their decisions were matching the data.
 
“What we found is that when we looked at certain hotels and we used the online reputation-management data that actually matched the higher prices the revenue managers were overriding,” she said. The data suggested revenue managers should sell at higher prices.
 
“I’m personally very excited about this. I think this is kind of a new frontier for revenue management because all this hard work that’s going into maintaining online reputation; I believe that now is the time to garner benefits of that reputation by actually having some opportunity in pricing,” Xuereb added.
 
COMMENTS   Show All
Samanthaworgull
7/10/2014 3:32:00 PM
EErazo, Thank you for your comment. I do not have a link for the manuscript as we (ROC attendees) were the first people to hear the results. I believe McGuire and her co-author are finalizing the details. Sorry I can't be of more help. Samantha Worgull, Editorial Assistant
EErazo
7/9/2014 11:01:00 AM
Do you have a citation for the article by McGuire (& Breffni, I presume)? It would be great to read the entire manuscript. Thanks!
Joe Buhler
7/9/2014 9:15:00 AM
The value of a five star reputation can't be overstated. As this study shows it can even result in a prospective customer accepting a higher price. This makes it even more essential to not only manage reputation but to actively market it everywhere by having reviews posted on their own website and in Google. Having reviews posted as pictures and testimonial videos makes them even more effective tools.
Login or enter a name   Post Your Comment  Check to follow this thread via email alerts (must be logged in)
(4000 characters max)

Comments that include links or URLs will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff

TRENDING
Exclusive: Hilton adds Canopy lifestyle brand
Best Western introduces two new brands
Reviews increasingly drive booking decisions
A hotelman gives Airbnb a try
Canopy by Hilton: ‘It’s all about mindset’
When bad online reviews are good for you
VIDEO
US supply growth not a problem
Low supply, group biz boost hotel sector
HDC attendees discuss revenue strategies
Hotel Data Conference: Day Two in review
Hotel Data Conference: Day One in review
LATEST NEWS
Manage mega events in context to reap results
Will group business return to Europe?
How to be a revenue leader of the 21st century
Business plans trump brands, lenders say
Profiling hotel profits: Occupancy or ADR?
Panel dissects customer acquisition costs
Contact Us
Hotel News Now
18500 Lake Rd.
Suite 310
Rocky River, Ohio 44116
        
Copyright © 2004 - 2014 Hotel News Now, a division of STR, Inc. All Rights Reserved.   Privacy