It likely comes as little surprise to any hotel manager that social media is playing an ever increasing role in consumers’ choice processes when it comes to booking a stay at a hotel. In fact, eWOM (electronic Word-of-Mouth) may play an even greater role than you may have imagined. A recent study conducted in Thailand published in the e-Review of Tourism Research states that eWOM is more effective than both advertising and promotional activities in influencing decisions about choosing a hotel. This statement has MAJOR implications for hotel managers concerned with occupancy and pricing.
eWOM affects consumers’ choices in a number of ways. Consumers use the information that they gain from customer reviews to form their images and attitudes regarding the destinations about which they read. This, in turn, affects their travel intentions and where they choose to book their accommodations. Studies have shown that hundreds of millions of potential travellers are now consulting on-line reviews. It was reported that as many as 84% of those booking hotels make these booking decisions by reading reviews.
Why on-line customer ratings are important to your potential consumers
Research into why and how tourists and other travellers use e-WOM has produced a number of interesting findings. Studies show that the main reason that consumers utilise on-line ratings is to reduce risk. Booking a hotel with which a person has had no experience can include many different types of risk including functional (do they do what they say they do?), time (less shopping around), financial (is the value worth the price?), psychological (did I make a good choice?) and social (what will my friends or family think?). The ratings are also used by potential guests to evaluate product quality, learn about the range of service offerings and price ranges and to hear about the consumption experiences of others. Because of this, on-line forums create more empathy, are more credible and tend to be viewed as more relevant than similar information generated by the hotel itself.
Knowing that consumers increasingly rely on e-WOM and that it tends to be much more effective than anything that the organisation can do on its own, has implications for management. Managers need to treat the existence of e-WOM as the serious tool that it can be. They need to learn how to measure it, to interpret it, and to use it as a means to concentrate improvement efforts where they are needed most.
How should e-WOM best be measured?
An ever increasing number of studies examining the effects of e-WOM have come up with a variety of ways to measure what people are posting on-line. One extremely effective set of measures has recently been developed for examining the relationship between dimensions of e-WOM and hotel occupancy. This study, published by Giampaolo Buhalis in the International Journal of Contemporary Hospitality Management, suggested that e-WOM be measured on the basis of three factors: product ratings, consistency and volume.
Product ratings can be either good or bad, or a combination of the two. Good and bad ratings are referred to as the valence of the ratings and valence has been shown to have a significant influence with on-line bookings. While one might think that a totally negative or totally positive rating might carry more influence, studies show that this may not be true. Ratings that only report negative or positive experiences are often seen to be less credible than those that provide both types of information. Those postings that provide a mixture of both good and bad are viewed as more credible and more likely to be believed.
Consistency of the ratings is another factor that should be taken into account. When the ratings vary widely in terms of their valence, little clear evidence is provided to the potential customer as to what they can expect. Therefore, it is likely that this inconsistency in consumer ratings will likely result in lower intention to book on-line and, in turn, to lower occupancy rates.
A final factor to consider when examining your hotel’s e-WOM is that of volume. High numbers of posts are likely to be interpreted by potential guests as many people having stayed at that hotel. If the valence is toward the positive, this serves to reduce the perceived risk of booking, since it indicates that not only have many people stayed, but they also had a positive experience. The increased number of postings also improves the chances that the potential guest will find a review that contains the specific information that they may be seeking to make a decision.
Taken together these three measures may provide helpful guidance for managers. First, managers can learn from what people compliment or complain about in the reviews and get a relatively impartial evaluation of their property and the service that they provide. This can indicate where resources should be allocated, where training is needed and where slow, or otherwise less than satisfying experiences have taken place. Consistency in comments viewed over time can indicate trends in the perceived quality of the experience being received by customers. Positive trends show that management strategies and policies are moving things in the right direction. Negative trends not only show that things are headed in the wrong direction, but also provide examples of exactly what is going wrong. Volume is a likely indicator that people either were highly satisfied with aspects of their stay or were not satisfied with hotel offerings. Studies have shown that WOM is more likely to be spread by those more highly satisfied or dissatisfied than those who just received what they expected with no negative or positive surprises.
What are they complaining about?
Studies have also examined categories of complaints received in the form of e-WOM. One study conducted in Pattaya in 2017 examined 1,350 hotel reviews that contained a total of 3,582 complaints. These complaints were broken down into seven (7) main categories. Far and away the leading category was complaints about the staff (1,377 complaints, 38.45% of the total). These included an inability to communicate in English or other foreign languages, poor check-in/check-out processes, inability for staff to solve problems and unfair, unfriendly or inattentive behaviours on the part of staff members. This was followed by complaints about rooms (1,012 complaints, 28.8%), complaints about bathrooms (607 complaints, 16.95%), complaints about the breakfast (324 complaints, 9.04%), hotel facilities (114 complaints, 3.18%), parking (52 complaints, 1.45%) and location (96 complaints, 2.68%).
While management might not be able to do much about location, room size or parking in the short-run, there is always an opportunity to improve in the number one complaint category: staff issues. Problems with staff can be mitigated or possibly even eliminated through such things as improvements in hiring practices, training, setting and monitoring KPIs (Key Performance Indicators), and periodic performance reviews designed to motivate the employees to be polite, friendly, and exhibit service-minded behaviours.
What is in it for me?
While there is some variance across studies, most studies cite a relationship between increases in travel review ratings and occupancy. Several studies report that a 10% increase in customer e-WOM ratings has resulted in a 5 to 7.5% occupancy increase. Paying attention to e-WOM ratings therefore has multiple benefits: it provides an indicator as to performance and trends in that performance; it shows where resources should be devoted to create needed improvements and it has a direct effect on your bottom line. It is a virtual win-win!
Author: Michael F. J. Clarke, CEO & Co-Founder, Kingsmen Hospitality Services, a leading advisory and training organisation for the hospitality industry can be reached at mclarke@kingsmenhospitality.com or +66 (0) 94 323 7428
Series Editor: Christopher F. Bruton, Executive Director, Dataconsult Ltd, chris@dataconsult.co.th. Dataconsult’s Thailand Regional Forum provides seminars and extensive documentation to update business on future trends in Thailand and in the Mekong Region.