Most hoteliers will agree that reviews and online user-generated content are important for business. Quantifying this importance, however, is often difficult.

I recently read a  study  which helps to better understand the effect that online reviews have on hotel conversion rates and pricing at the point of purchase. The study is the first of its kind using simulated booking engines and heat mapping technology to determine consumers’ hotel choices.

The findings reveal that reviews do indeed have a significant impact on both hotel conversion rates as well as the rates that travelers are willing to pay. Among the findings:

  • Given equal prices, travelers are 3.9 times more likely to choose a hotel with higher review scores
  • When hotel prices are increased for hotels with better review scores, travelers are more likely to book the hotel with the higher score despite the higher rate
  • When asked, 76% of travelers were willing to pay more for a hotel with higher review scores

The study provides evidence that a strong focus on online reviews and reputation management can indeed lead to increased revenue, both from improved conversion rates as well as optimizing pricing.