Hotel Reviews: The More we Look, the More Evidence we See of the Wisdom of Crowds
New research published today demonstrates that user reviews are more rational and useful than current industry opinion would have you believe
By Jim Rozell – Founder and CEO of Hotel Compete
Today Hotel Compete publishes new research into fascinating and important subject of hotel review scores. This research builds on an earlier study on the topic: Hotel Reviews – The Hotel Industry Must Learn from the Wisdom of Crowds. That article highlighted a fallacy in current industry commentary: that review scores are too biased or unreliable to be used for analytical purposes.
Popular industry opinion has it that guests are only motivated to write reviews when they are either unusually happy or unhappy with their experience at a hotel. Or that one guest's "great" experience may be "average" for another. And that inconsistencies like these render hotel rankings unreliable as management information. Opinions like these are common in today's lodging industry, but they miss the point on the potential of User- Generated Content.
There is no doubt that review scores have an important and growing significance in hotel marketing. But as a data source, they share many characteristics of some of the most reliable resources identified in James Surowiecki's excellent 2004 book, The Wisdom of Crowds. The book – which is a true "must-read" for anyone involved in market analytics – explores the following phenomenon: when the opinions of many independent individuals are aggregated, they tend to produce more reliable predictions than even the best-qualified individuals.
Our ongoing research shows that user review scores are neither skewed, nor unreliable. In fact – just as The Wisdom of Crowds suggests, they are a valuable resource in the analysis of hotel performance. Many operators have embraced analysis of reviews for reputation management– ie tools and processes designed to help operators to understand what their guests are saying about them online. But – as we argued in our previous post – user reviews remain under-utilized as an analytical resource.
Hotel Compete has been analyzing review scores for some time. We analyze the distribution of scores across each of the varying scales used by the different review sites, and continually find review scores that are normally distributed. This is important because normal distributions are statistically interesting. They enable us to establish patterns and predict things, like how we should expect a hotel to perform financially.
In our most recent research (which can be accessed here) we use a sample of about 25,000 hotels from our database to perform an analysis of review scores by hotel class. Hotel Compete has its own system of hotel classification, which is explained in greater detail in the article. But to summarize, the fascinating thing about this analysis is that it uncovers so clearly the impact of hotel class upon review scores. Not only are hotel review scores distributed evenly overall, they also appear to be distributed normally within hotel classes.
This has some interesting implications for performance analysis – not least that we can now understand the range of scores that hotels of a particular type are supposed to achieve. But perhaps the most interesting finding of this analysis is the alignment between the quality of the product and the average reported quality of experience. Guests appear to grade hotels in line with their expectations, which are largely rational. This finding could scarcely be further from the current body of expert opinion on hotel reviews, as we discussed in our previous post.
I urge you to take a look at today's analysis. It is the latest example of the analytical power of user review scores. We will publish more insights in the coming months – please check out our blog to learn more about this and the other analysis that Hotel Compete is currently engaged in. In the meantime you can learn more about user reviews and the Wisdom of Crowds by downloading our latest Industry Viewpoint on the subject.
ABOUT HOTEL COMPETE:
Hotel Compete began five years ago, by CEO Jim Rozell, with the goal of changing the way hoteliers
thought about competitive positioning. The idea that every hotel had a static and relatively compact set of "true" competitors never set to HC. Their "booker eye view" of the market concept requires them to emulate how customers shop for hotel rooms. This approach allows Hotel Compete to apply a unique algorithm that assesses potential competing hotels, identifies the advantages a hotel has versus potential customers, and allows hoteliers to derive the value of those advantages in terms of rate and market position. Hotel Compete identifies a hotel"s "fair share" and discovers its opportunities to get more of it when it exists. Hotel Compete thinks like the customer. They collect the same data as them and formulate it in to a set of tools that help hotels generate increased revenue. They follow up with tools to monitor a hotel"s ever changing market position so that their customers don"t miss any new opportunities. For more information about Hotel Compete, follow them on Twitter (@HotelCompete) or online at http://www.hotelcompete.com.
