Last week we attended IE Real Estate Club’s event on tendencies in the hospitality sector. We enjoyed great presentations from Aurelio Vázquez(CEO Iberostar), Alfonso del Poyo (Vice President of Melia Hotels International), or Alex Robinson – Senior Manager Industry Partners at STR.

Laura Hernando, Managing Director of Hotels for Colliers International, presented interesting figures on transactions in the sector, and updated us on the news of hotel contracting, such as mixed formulas in contracts: hybrid management and franchise(the first one in Spain was signed in 2019); leasing contracts in which conditions change, for example, in loss situations… Without a doubt, this sector has become more sophisticated, as well as its primary customers when making a purchase.

At the round table, all the speakers agreed that this “sophistication” implied necessity for hotels to reformulate their strategies as well as the importance of brands.

Nevertheless, today’s statistical data gathered from online searches shows that in Spain, brands are not a decisive factor in hotel bookings. Instead, the three most decisive factors are:

• The Hotel product
• The location
• The reputation of the brand

Today we will concentrate on this last variable and its direct impact on revenue. Because according to the rating given to you by your customers, especially on online platforms, you will be positioned higher on rankings, giving you more visibility and greater sales opportunities. We must not forget that the standard online reservation process includes considering online opinions. And that 83% of users trust opinions left by other customers on the internet.

The Impact of Reputation on Revenue Hotels

Expedia presents the following data: A hotel with +1 point in reputation compared to another, obtains +9% in sales.

And what is the impact on EBITDA? Considering that 38% of users are willing to pay more for a more reputable hotel, the impact is direct.and positive. Cornell University and Tripadvisor carried out an exhaustive study on this matter, validating these arguments. This is the date their analysis returned:

Tripadvisor and Revenue Management

Knowing that the figures are relevant and that the impact on turnover is considerable, as an operator in the sector we advise you to:

-Carry out an initial analysis before starting your operation.
-Incorporate the data discovered by your initial report into your management roadmap.
-Define specific KPIs in reputation with an impact on quality and revenue.

Do you want to know more? Are you an operator in the sector and need an ad-hoc report?