Cornell Study Demonstrates ROI of Social Media and Reviews

Groundbreaking study links reviews, occupancy, and pricing power

As social media has grown in profile over the last few years, the question on many hospitality professionals’ minds has been: what’s the return-on-investment? Is social media truly worth an investment of time and resources? To date, there has been no concrete numerical confirmation.

Now, a groundbreaking study from The Cornell Hospitality Research Center provides some answers. “The Impact of Social Media on Lodging Performance” is the first research to demonstrate the return on investment that hotels can expect from social media and reviews. Data from ReviewPro, STR, Travelocity, comScore and TripAdvisor has been combined to show social media’s growing influence on the consumer research process and how this influence, in turn, can impact a hotel’s ability to set prices, drive occupancy and increase revenue. The key findings of the study, along with key takeaways for your business, are summarized below:

Key Finding #1: Guests are visiting TripAdvisor more frequently prior to booking

The report shows that more people are visiting TripAdvisor to assist in their hotel research. Plus, those already using the site are returning more often and all users are viewing more reviews before making hotel choices.  

The data also demonstrates that reviews are one of the last resources guests reference before selecting a hotel, as they visit TripAdvisor significantly more often in the five days prior to booking. In fact, over one-quarter of their total TripAdvisor visits occur during that time frame.

Key Finding #2: Higher review scores on OTA sites allow hotels to charge more while maintaining occupancy rates

The study found that increases in a hotel’s user review scores on OTA channels can positively influence the relationship between price increases and demand. Higher review scores increase conversion rates, even when prices increase.

Typically, as a hotel’s price per room increases its occupancy rates tend to go down. However, if a property can increase its review score by one point (on a five-point scale) on OTA channels, it could increase its prices by about 11.2% and still maintain the same occupancy rates. The positive effect of an increased user review score can offset the negative occupancy impact that’s normally attributed to higher prices.

Key Finding #3: Properties with stronger reputations across all channels perform better overall

The research shows that as a property’s social reputation improves, its overall performance also improves. A stronger online reputation increases a hotel’s pricing power – allowing it to increase its prices while maintaining the same occupancy levels. This price increase results in higher revenue and improved performance. The reverse is true as well – properties with weaker social reputations perform worse because they have to reduce prices to maintain occupancy levels.

Takeaways for your business

  • Register and verify your property with TripAdvisor to take full advantage of the site’s qualified audience.
  • Visit your Management Center regularly to refresh content and re-engage travelers who may return to your property page several times as they research a trip.
  • Monitor your reviews to see how you’re doing, learn from previous guest feedback, and make the necessary operational changes. The key to improving your review scores on any platform is providing the best possible guest experience.
  • Encourage new reviews to help build your TripAdvisor overall review score. To learn more, select “Free marketing tools” in the Management Center and then check out the tools under “Get more reviews” for help.
  • Management Responses are a great way for you to build your reputation as potential travelers get to know your property. If a lower-rated review comes in, use that opportunity to write a Management Response and make a good impression on other guests.
  • Good service is the foundation of your reputation. You can use the Review Dashboard to watch for common service themes in your reviews (under “Your Property Overview” on the Management Center homepage). You can then work on making improvements.

Source: “The Impact of Social Media on Lodging Performance.” Chris K. Anderson, The Center for Hospitality Research. Cornell University. November 2012. 



Read the full report on "The Impact of Social Media on Lodging Performance"

Read the full report on "The Impact of Social Media on Lodging Performance"

Last Updated: July 31, 2013