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People today expect to be connected always and everywhere; sometimes it’s hard to believe that there was a world before smartphones and Wi-Fi. In the time since Wi-Fi became ubiquitous in hotels, apartments, and public spaces, it has fueled the evolution of connectivity in a lot of ways. Just like Maslow’s hierarchy of needs, the most basic needs start at the bottom, and you can’t get to the next level without a strong foundation. 

By now, everyone is aware that hotel giant Marriott International announced on Friday a massive data breach that goes back more than four years and may have affected up to 500 million customers worldwide. 

After two years of preparation, the FlyZoo Hotel — a futuristic property that uses interactive technologies to do everything from greet guests to deliver room service — is ready for business. 

Mobile technology is fast becoming central to the entire travel experience. Consumers are increasingly using their smartphones to research trips, book accommodation, check in at the airport, and access their hotel room. But one of the next big roles mobile has to play in the travel process is mobile payment. The idea of an entirely cashless society might still seem some way off, but mobile payment is gaining popularity. As it becomes more widely used, its fast and frictionless nature will bring benefits before, during and after a trip. 

Digital marketing, also known as internet marketing, plays a significant role to boost hotel website traffic and online bookings. Recently, many big announcements were made in the digital industry, for example when Facebook introduced a new video format for marketers, or when Google announced a board core algorithm. If you are a new hotelier and want to stay ahead in the industry, then you should know what’s going on in the hotel digital marketing industry. 
 



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The Power of the Negative Review

12/18/2013

The hotel marketplace is rapidly evolving from price transparency, where the advent of the OTAs suddenly allowed consumers to easily compare all room rates in a market, to value transparency, where, along with price, consumers have ready access to user experiences with hotel stays in the form of reviews, ratings, rankings and images.  As this transition unfolds, nearly every hotel revenue manager I’ve spoken with in the last couple of years (and there have been many) has (smartly) asked some version of the same question: How should all of this user generated content impact pricing decisions for my hotel? 

My research partner, Breffni Noone, Associate Professor at The Pennsylvania State University and I set out to answer this question for the industry.  We have done several studies (and have more planned) to explore consumer buying behavior in this new social world.  For our first study, we developed a scenario similar to buying a hotel room online, in which we showed a hotel example with different combinations of price (low or high), review valence (positive or negative) and aggregate rating (low or high).  We tested how the different levels of these attributes, in combination, influenced our participants’ quality and value perceptions.  Our second study built on the first by getting at the way that how consumers make tradeoffs between different attributes.  We designed a choice experiment to test how much influence these attributes have on consumers’ likelihood to purchase a particular hotel.  We varied price, review valence (positive or negative), the content and language used in the review, known vs. unknown brand, TripAdvisor rank, and aggregate ratings in a set of three hotels, and asked people to choose the one they would book. 

We will present the results from both studies in detail in an upcoming issue of Hospitality Upgrade, along with more information on how we designed and executed the two studies.  As a teaser, I’ll preview some key findings here.  The two studies clearly demonstrated that reviews are king in consumers’ decision making process, followed by price.  While consumers do pay attention to ratings, TA ranking and brand, they use the valence of the review (positive or negative) as an indication of the quality and value of their purchase, and as a primary driver of choice.  This means that negative review will remove a hotel from the consumers’ choice set, regardless of the price. 

Many hoteliers want to know whether they can charge a premium for a property with good reviews.  Our study clearly demonstrated that consumers always preferred to pay the lowest price, all things being equal.  Consumers would choose a higher priced option with better reviews than the competition, but from the choice patterns, it seemed that this was more the result of NOT picking the poorly reviewed hotel because of the negative reviews, than a decision to pay more because of the positive reviews.  So, if you are definitely better than the competition, you have some additional pricing power, but if not, consumers will look at price also.  The best advice I can give to managers is that they must pay attention not only to their own reviews, but also to their review position relative to the competition, before making any strategic pricing decisions. 
  

About The Author
Kelly McGuire

SAS
Hospitality And Travel Global Practice


Kelly McGuire leads the Hospitality and Travel Global Practice for SAS.  In this role, she is responsible for driving the offering set and setting strategic direction for the practice. McGuire works with product management, sales, alliances and R&D to ensure that SAS solutions meet the needs of the market, and evangelizes the value of advanced analytics to the industries she serves.  She has a PhD in Revenue Management from The Cornell School of Hotel Administration.

 
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