TRAVELERS CONSIDER A hotel’s brand more than chain scale segment or location in writing reviews that influence the hotel’s online reputation, according to a study from Cornell University School of Hotel Administration. The study also found that reputations of hotels within a brand vary more than hotels among competing brands, and under-performers can drag down an entire brand’s reputation.
“Indexing Hotel Brand Reputation” by faculty members Chris Anderson and Saram Han collated data from more than 30 million reviews of hotels in the U.S. and Canada from 47 online sources collected from Jan. 1, 2016, to March 31, 2018. It addresses the assumption that travelers chose their hotel based on its segment or star classification, with brand being of secondary importance.
“Despite that distinction based on segmentation, it turns out that brand reputation and consistency are more critical than originally thought,” Anderson and Han write in the study. “The research presented in this report has found greater variation in reputation across brands than across segments.”
The study’s authors said, when coupled with their previous research that shows a connection between hotels’ online reputation and revenue performance, the results of the new study hold implications for hotel owners, investors and operators as well as the brands they choose to partner with.
“If a hotel’s brand is a more reliable indicator of reputation than its chain scale or star classification, travelers will lend greater weight to brand when selecting a hotel,” the study said. “Over time, brands that consistently deliver on expectations across their portfolio will carve an increasingly higher market share.”
The study also notes the online reputation of a hotel is subjective, determined by how well a location meets travelers’ expectations set by more objective measures such as chain scale and star ratings. Travelers choose a brand because it creates positive expectations, but if those expectations are not met consistently across the brand, customers will look elsewhere.
“The large variations in reputation found among hotels within brands suggest that while some hotels are exceeding expectations, others are failing to deliver on brand promises. Since reputation is also a strong indicator of financial performance, hoteliers and investors would be wise to pay close attention to both overall reputation and reputation consistency,” the study said. “Reputation laggards will drag down the entire brand, although properties that exceed brand standards may paradoxically have an adverse impact on reputation by increasing expectations.”
Drury Hotels and Hilton are cited in the study as examples of brands focused on both overall reputation and reputation consistency. “These companies have implemented technology and processes to track, analyze and manage guest feedback in ways that improve online reputation and minimize uncertainty at both the property and brand level.”
Other studies have revealed the importance of online reputations. Online reviews have allowed small, independent hotels to close the revenue gap with large brand franchises by more than 50 percent since 2015, according to “Online Reputation Mechanisms and the Decreasing Value of Brands,” a study published in the Journal of Marketing Research earlier this year by Brett Hollenbeck, assistant professor at UCLA Anderson School of Management.
“The spillover of reputation across products sold under the same brand should decrease, and with it the value of branding as a whole,” Hollenbeck wrote in the study. “Whether brands should react to this decrease in spillovers by investing less in quality of individual products or whether they should invest more in individual product quality and less in brand reputation remains an open question beyond the scope of this paper. But the results here do suggest this is likely to vary over the average quality level of the brand as well as the type of market or setting they are found in.”
Anderson and Han plan to release a second part to their report later this year. It will expand the focus of the study to a global scale and will compare the relationship between brand reputation and pricing power.