Online travel agencies have long made it easy to compare hotel room prices. Now, using online review sites like TripAdvisor, consumers are gauging value, too.
New research from SAS and The Pennsylvania State University, "Pricing in a social world: The influence of non-price information on hotel choice," reveals that reviews trump price as the decisive factor in consumer choice. In fact, negative reviews will eliminate a hotel from consideration, regardless of price.
"This study proves hotels must proactively manage their online reputation," said Kelly McGuire, PhD, Executive Director of the Hospitality and Travel Global Practice for SAS. "Hotels should monitor all key social media channels using keyword searches, and analyze conversations for trends. If many people are saying the same thing about your brand, pay attention. Sometimes the things you don't want to hear are the ones that help you avert a crisis or turn a trend around."
The study noted that a low price isn't enough to overcome negative reviews. All other things equal, consumers still prefer a low price. However, while consumers will opt for a higher-priced hotel when the lower-priced hotel has negative user-generated content (UGC), they still prefer to pay the lowest price possible.
So, hotels need to pay attention to how their reviews compare to competitors when setting price, the study stressed.
"Many factors go into a pricing strategy, including demand patterns, business mix, strategic goals, value proposition and competitive position. Revenue managers must consider UGC as only one factor among many," said Breffni Noone, PhD, Assistant Professor at the Pennsylvania State University School of Hospitality Management.