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PhoCusWright's Social Media in Travel Industry: Reviews and Sentiments

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October 01, 2010
David Juman

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The Traveler Review
The emergence of the social Web has delivered a powerful force in online travel: the traveler-generated review. Traveler review Websites and hotel reviews through online travel agencies (OTAs) are among the influential forces most frequently cited by travelers when shopping. This report examines traveler-generated review activity online by analyzing the volume, frequency and sentiment of traveler reviews. The analysis is based on nearly 1.9 million online traveler reviews garnered through data collection and analysis in partnership with Brand Karma by Circos. PhoCusWright also segments this analysis by the source of the review (the type of Website posted, such as OTA versus traveler review site), hotel brand and hotel star rating at the brand level.

Social Travel Activity
Online traveler review activity follows annual leisure travel cycles, with summer peaks and winter troughs. Social travel sites posted more than 125,000 new reviews in August 2009, but fewer than 40,000 in December of the same year.

The online traveler-generated review landscape is consolidating. While six Websites (three traveler review sites and three OTAs) accounted for 86 percent of reviews in 2008, just four Websites (one traveler review site and three OTAs) accounted for 80 percent of all user-generated reviews in 2009.

The recession has had a major impact on traveler review trends in 2009. The three and four-star categories saw significant growth in both the volume of traveler reviews and their respective share of all posted reviews. By comparison, luxury five-star properties saw a noticeable drop in both review volume and share of reviews, as did extended-stay brands, due to the sharper fall-off in luxury and business travel.

OTAs have supplanted traveler review sites as the place where travelers most frequently post reviews. Traveler review sites accounted for 51 percent of traveler reviews in first half of 2008, versus 47 percent for OTAs; in second half 2009 OTAs accounted for 74 percent of all traveler reviews, versus 25 percent for traveler review sites.

Buzz score differs significantly by hotel star rating classification. Hotels in the four and five-star categories have much higher buzz scores than one, two and three-star hotel brands, indicating that guests of more upscale hotels are far more likely to post online reviews. Online travelers who are active consumers and creators of social content spend more on travel.

Social Travel Sentiment
There is a clear correlation between a traveler’s perceived value of a hotel stay and his expectations about quality. A traveler’s sense of satisfaction may be linked to how much he paid versus how much he thinks he should have paid. The hotel aggregate STAI score rose sharply during the fourth quarter 2008, over the same period that average daily rates (ADR) saw a significant decline. STAI remained consistently higher throughout 2009, when hotel demand and ADR stayed at historic lows.

The aggregate hotel average of positive to negative reviews was three to one in 2009, but there are meaningful differences across different hotel star categorizations. One and two-star brands have a much lower positive to negative ratio, while the three and four-star categories have a significantly higher ratio.

STAI scores vary significantly by hotel star rating category: Three and four-star categories have the highest average STAI score, while the one-star category has the lowest. Interestingly, the aggregate STAI score for the five-star category has been on par with or below the STAI for the two-star category, indicating that online traveler sentiment is linked to perceived value and expectations, and not simply quality.

The STAI for all reviews on Priceline is significantly and consistently higher than on TripAdvisor or any other OTA. The dynamic of perceived value and quality expectations is likely at play here, as a majority of Priceline’s U.S. bookings are opaque (name your own price) and its brand is so strongly tied to discounting.
Traveler review sentiment, hotel star rating and the type of site where the review is posted are correlated as well. Reviews posted on OTAs by guests of four and five-star categories were significantly more favorable than those posted on traveler review sites by guests of the same brands, thanks again to the dynamic of perceived value and quality expectations. OTA bookers are more price sensitive, and those booking upscale and luxury hotels on OTAs are more likely to be upgrading from three and four-star hotels because of access to a lower rate via the OTA.

Tracking TripAdvisor is not enough: Hotels must monitor mentions across a range of travel sites, including OTAs, and consider initiatives to encourage guests who have booked through an OTA to post a review.

Benchmark against a competitive set: There are clear, significant differences in buzz and STAI by star classification. Hotels must measure performance against their relevant competitive set and adjust for seasonal variations when comparing current and historical performance.

Benchmark by channel: Key metrics vary significantly by channel. Hotels must track buzz and STAI against their competitive set by Website to get an accurate picture of their social media performance.


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