Tech Talk

Recent posts

Love
Posted: 10/23/2020

"Friendship often ends in love, and love in friendship never ends. "

We’re hardly out of the woods with COVID-19, and that means many properties will have to make do with a customer base mostly derived from local leisure, staycations and workcations from drive-to markets. With fewer overall guests, outside of cost savings efforts we must simultaneously look at maximizing the revenue per available guest (RevPAG), and there’s no better way to go about this than by sharpening your use of the PMS.

This is the last issue of Siegel Sez before this year’s CYBER HITEC event. HITEC is an event I have not missed in 30 years, and historically it has always been a great place to find innovation.

Toxicity Kills
Posted: 10/07/2020

It doesn’t matter if it is toxins in your physical environment or toxins in your mental environment. This stuff kills! 

It’s said that when someone’s mindset shifts, everything around them can change at the same time, and in our current setting, the importance of being in the right headspace, both personally and as an organization, can’t be discussed enough.



want to read more articles like this?

want to read more articles like this?

Sign up to receive our twice-a-month Watercooler and Siegel Sez Newsletters and never miss another article or news story.

x
 

The Power of the Negative Review

12/18/2013
by Kelly McGuire

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.

 
Comments
Blog post currently doesn't have any comments.
Leave comment



 Security code