In Newsletter #25: Luxury hotels have the most to gain from improvements in online reputation | Google debuts a new travel app | Morgans acquisition another win for in boutique brands.
Winter is coming? This isn’t just fever around the return of Game of Thrones, but an article in The Wall Street Journal, kindly sent our way by Philip Wolf, on the tech bubble bursting. It’s a very interesting read when juxtaposed against CB Insights data showing travel tech funding up 133% in Q1 2016. If you recall, back in Newsletter 13, travel tech investment in 2015 was incredibly strong and while this trend has continued, many are of the opinion that tougher times lie ahead for tech investment. This clearly hasn’t stopped SBE from acquiring Morgans (below), so we remain very optimistic about the times ahead.
No matter what climate awaits, there are always going to be exciting innovations making waves. One such startup, whom we had the pleasure of meeting on stage at the ARDA conference last week (when they took the top innovation award) is Trekkable. Started by Benedict Jones, Trekkable has a vision to bring the right information - 100 data points to be precise - to travelers with mobility challenges to help them in their hotel booking process.
We are going to be at HITEC this year (booth #1945!) and our thanks to Alan Young for awarding us a Top 5 company to look for at the show this year.
- Alex Shashou
HIGHLIGHTS FROM THE WEEK'S NEWS...
Luxury hotels have the most to gain from improvements in online reputation.
Why it matters: We - and everyone else - write a lot about the influence TripAdvisor has on the booking ecosystem; an influence that has been well documented (it’s pretty much an industry maxim at this point that better TripAdvisor rankings = more bookings). What’s less concretely determined is how better TripAdvisor scores directly result in more revenue.
This particular report investigates whether a direct correlation really exists between hotel performance (as measured in achieved RevPAR) and its online reputation (which for this study’s - and most everyone else’s purposes - means rankings on TripAdvisor). They also dissect that correlation across three pricing segments - budget + midscale, upper midscale, and upscale and luxury - with interesting and important results.
The authors detail how the outsize influence of TripAdvisor in booking decisions impacts the attention of hoteliers, who in turn are compelled to invest increasingly larger amounts in online reputation management. They’ve got impressive stats on hand:
Two of the top five factors impacting accommodation decisions pertain to online reputation. (The others are price, which ranks as number one, and previous experience and proximity to key attractions, which rank as fourth and fifth respectively.)
They’ve also got this breakdown on the direct influence rankings have on bookings:
- Hotels ranked #10 on TripAdvisor book 10% more room nights than hotels ranked #20;
- Hotels ranked #5 on TripAdvisor book 9% more room nights than hotels ranked #10;
- Hotels ranked #2 on TripAdvisor book 7% more room nights than hotels ranked #5;
- Hotels ranked #1 on TripAdvisor book 11% more room nights than hotels ranked #2.2
But to dive deeper into the connection between ranking and revenue, they look to results from over 110 resort-type hotels in the Eastern Adriatic during the summer of 2015. It’s worth noting that all pricing segments showed a direct correlation between improved TripAdvisor scores and revenue. Segmentation also yielded interesting results, with the strongest correlation found in the top pricing category (the upscale and luxury segment).
The good news here is while factors like destination attractiveness and image, microlocation of the property and the hotel brand affect hotel performance - and are more or less fixed - online reputation is something that not only can be changed, but its improvement almost certainly results in more revenue, regardless of your hotel’s pricing category. And there’s lots of advice for how to improve your TripAdvisor scores, like in Newsletter 24 (which looks at the correlation between hotelier response rate and rankings), Newsletter 18 (which looks at the influence of guest sentiment on review scores), Newsletter 17 (which looks at what reviews from the world’s top hotels can teach us), Newsletter 16 (which looks at the how improving your hotel’s guest engagement can improve your reviews), Newsletter 4 (which looks at how improving your engagement on TripAdvisor itself improves rankings), and in The Secret of Great TripAdvisor Reviews, which we co-wrote with the hospitality marketing agency Screen Pilot.
Google might be building a game-changer in travel...
Why it matters: You don’t underestimate Google. So when news comes out the company may be building its own all-in-one travel app, it caught our attention. As far as we are aware, this new app, named “Trips,” is basically a compendium of travel guides. As you are well aware, no one owns more content on locations that Google. So, from ‘getting around,’ to ‘things to do,’ this Trips app has a lot of potential, especially when you consider the integration it will have with your email and calendar (i.e. it will know what flights and destinations you are already booked for).
This could be the tool we have all been waiting for - combining all our travel searches into one easy-to-use interface. It might even be the tool our concierges have been waiting for! One that could help them navigate their locale and provide the best of the best to your guests. We’re staying tuned for now.
Another one bites the dust.
Wall Street Journal | SBE Entertainment to Acquire Morgans Hotel Group
Why it matters: In Newsletter 6, we covered the strength of the smaller boutique brands in their ability to flourish in today’s hospitality environment. As of May 10, Morgans Hotel Group is the latest to be acquired, albeit not by a chain this time, but by SBE Entertainment, for an estimated $800M. Morgans, with 14 hotels (and an additional 3 on their way), is a truly outstanding collection of boutique properties that will now be taken off the public exchange after closing 10% up on the news.