Study quantifies financial impact of good online reviews for hotels

Hotel owners have long touted the importance of positive online reviews, and now a new study calculates how much they mean to a hotel’s bottom line.

For every 1% increase in a hotel’s online reputation score, a hotel enjoys a 0.54% increase in occupancy, which can lead to a 1.42% increase in revenue per available room, according to an analysis by the Center for Hospitality Research at Cornell University.

The study, by Cornell professor Chris Anderson, looked at data from more than 3,000 hotels in 20 cities, including several international locations. He spent about six months crunching occupancy numbers, daily rates and online reviews.

Anderson also looked separately at data from Travelocity, one of the world’s largest travel websites, and found that if a hotel gets a 1-point jump on the site’s five-point rating scale, the hotel can increase its price by 11.2% and keep the same occupancy rates.

The most surprising result of the analysis, he said, was that higher reviews can have a bigger financial impact on economy and mid-scale hotels than on luxury brands.

“The impact of online review scores increases for hotels on the lower chain scale,” Anderson said.

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