How Guest Reviews Affect Hotel Room Prices

In the hotel industry, guest reviews play a huge role in determining how much hotels can charge for their rooms. Positive reviews not only boost a hotel’s reputation but also influence its pricing strategy. Let’s dive into how guest reviews impact hotel room pricing, including some insights from a study by Cornell University.

The Cornell Study

Researchers at Cornell University found a strong link between online reviews and hotel revenue. They discovered that if a hotel’s online reputation score goes up by just one point, it can increase room prices by about 11.2% without affecting how many rooms are booked. This shows that hotels with great online ratings can charge more because people are willing to pay extra for quality.

The Power of Online Reviews

Online reviews are super important for hotels. They help shape what people think about a hotel, and positive reviews make it more attractive to potential guests. On the other hand, negative reviews can scare people away and reduce revenue. Studies have shown that travelers are more likely to book hotels with high ratings, even if it means paying a bit more. This willingness to pay extra for well-reviewed hotels shows just how much online reviews affect pricing.

Price Perception and Review Impact

The way people perceive prices is also influenced by reviews. If a hotel has great reviews, people are more willing to pay higher prices because they think it’s worth it. However, negative reviews can have a stronger impact on whether people book a room, often outweighing price considerations. This highlights how important it is for hotels to manage their online reviews well to stay competitive.

Brand vs. Guest Ratings

While having a strong brand is important, guest ratings have a more direct impact on pricing. Research by Expedia found that travelers are more likely to choose hotels based on guest ratings than brand reputation. This suggests that focusing on guest satisfaction and review management can be more profitable than just building the brand.

Other Factors to Consider

Several factors can affect how online reviews influence pricing, including the hotel’s brand image, its star rating, and how important price is to guests. For example, luxury hotels might not be as affected by online reviews because they already have a strong reputation, while budget hotels are more sensitive to changes in review-driven pricing.

Conclusion

The relationship between guest reviews and hotel room pricing is pretty complex. Hotels that focus on making guests happy and managing their online reviews well can charge higher prices without losing bookings. As the hotel industry keeps evolving, understanding how guest reviews affect pricing will remain crucial for hotels looking to maximize revenue and stay competitive.

Why ZUZU?

ZUZU’s revenue management expert takes your review score into account when deciding your price positioning and defining your hotel’s revenue management strategy. We have run hundreds of tests to define review score impacts per market to come up with proprietary strategies for over 2500+ hotel partners.