Introducing readily available online guest feedback into a hotel’s revenue management strategy is growing in popularity and success.
It’s a relatively new phenomenon—customers actually shaping a brand by commenting and sharing experiences. Yet travelers rely so heavily on peer experiences that to not manage it, to not stay on top of guest comments, is to ignore one of the most important parts of your brand. Part Three of the four-part series “Building a reputation” focuses on turning reputation management into revenue management.
INTERNATIONAL REPORT—At the Manchester Grand Hyatt in San Diego, like most hotels, guests weren’t happy about paying for things they expected to be free, namely parking and Internet access. The complaint showed up frequently on feedback sites such as Twitter and TripAdvisor.
Fortunately, Electronic Sales and Marketing Manager Kristin Spitz was paying attention. Spitz, who uses third-party software to monitor the Hyatt’s guest reviews and mentions on social-media sites, took the negative feedback about extra fees to a weekly management meeting.
Working with the hotel’s revenue manager, Spitz and the team decided to create a package that offers free Internet and free parking for guests. Now, when guests comment online about the charges, Spitz will respond with a note about the new promotion.
“I’ll respond with, ‘We’ve heard others say the same thing, and we’ve now included Internet and parking,’” she said. “That package is doing extremely well.”
Introducing readily available online guest feedback into revenue management strategy is growing in popularity, and Spitz said the parking and Internet package is the first example of many pricing decisions she hopes to influence.
“It was our first kind of stab at it,” she said. “But I see us doing a lot more of that. The revenue manager and I work closely together all the time.”
In fact, today’s evolution of reputation management is often compared to the evolution of revenue management that occurred 10 to 15 years ago. At that time, revenue management was a new product and practice, said Daniel Edward Craig, former hotel GM and current online reputation management consultant. Today, hotels have a revenue management team that typically meets weekly and sets pricing strategy and tactics.
“That’s where reputation management is heading,” he said. “The reason for that is the direct connection between reviews and reputation and bookings. There is a direct connection, not only in demand for a property but the prices you’re willing to charge. You’re only worth as much as travelers think you’re worth.”
Peer scores, such as those calculated on TripAdvisor, help strengthen the link between reputation management and revenue management, said Josiah Mackenzie, director of business development at ReviewPro.
“Reputation management is revenue management,” he said. “There is a direct link.”
When booking, Mackenzie said 30% of travelers switch hotels at the last minute after looking at TripAdvisor scores. He said client hotels that have experimented with comparing reputation management data with pricing power have seen surprising results. One client in particular compared the boost it was able to realize on review sites by improving the hotels’ description and engaging with the guests more frequently to the flexibility it had with rates. Within four or five weeks, the return on investment paid dividends.
“This is what I see as the opportunity,” Mackenzie said. “Take these analytics and do something more creative. I see reputation management becoming a lot more sophisticated right now.”
Brian Payea, head of industry relations at TripAdvisor, agrees. He said there are plenty of studies that show the stronger your reputation online, the better your ability to garner a higher rate.
“There is definitely a correlation between the ability to get a price and your reputation,” he said. “It’s all part of the same equation.”
At ZMC Hotels, a management company with a portfolio of 33 branded and independent hotels, the company admittedly is only in the beginning stages of using feedback to shape strategy. The company’s project specialist, Ellen Troeltzsch, monitors and responds to reviews remotely. She tries to keep the GMs aware of what is being said online about the hotels.
“Our revenue management team was one person, and she knew more about all of this before we even knew it existed,” Troeltzsch said. “Her department has grown to three people and most of the properties have a meeting once a week with this group.”
Recently, ZMC organized a social-media department, and for this first time earlier this month the revenue management and social media teams combined for a meeting.
“It’s very important that these two be connected on marketing and pricing,” she said.
Ultimately, reputation and revenue managers can work together to determine and optimize the actual value customers place on a property. The value score on TripAdvisor, for example, can be used to help hotels generate more revenue.
“If two hotels are in the same (competitive) set and priced competitively, yet one has a very high value score and the other is low, then it’s possible for the higher-rated hotel to raise rates to gain revenue and market share,” said Mike Wylie, founder of ReviewAnalyst. “Guests may be looking for value, but they’re also looking for the best experience. With collaboration between reputation and revenue management teams, you can find the right balance of rate based on the customer’s perception of the experience based on peer reviews.”
Wylie compares guest feedback to advice from a neighbor about a nice hotel before an upcoming trip. Helping avoid a bad travel experience is incredibly motivating for guests, he said, more so than saving money.
“Hotels should seize that motivation as a real revenue opportunity,” he said.
Spitz said reputation management teams and revenue management teams working together is the way of the future. In addition to monitoring feedback, she tags certain comments as what she calls “new business opportunities,” such as an online user typing, “I need a place to stay in San Diego,” or any tweets or blogs asking “Where should I stay?” Spitz then follows up or replies to those users with new offerings or specials.
“In the future, there will be the revenue manager and the reputation manager,” she said. “Those two positions really go hand in hand. Take advantage of the people who are doing the marketing for you online.”