[Calculator] How a one-point increase in your TripAdvisor rating boosts hotel revenue

With close to 150 million visitors every month, TripAdvisor is one of the world’s biggest travel websites.

But despite a huge potential audience, you might wonder if it’s worth your time and effort to build a presence on this giant platform. Perhaps you’re overwhelmed by the prospect of ongoing review management or wonder if it can really result in increased revenue for your business.

At Customer Alliance, we've successfully guided thousands of hospitality businesses in increasing their presence on review platforms like TripAdvisor, and see firsthand the difference it can make. Now, a new study sheds light on just how significant this impact can be. 

Before we dive into the study, let's see how much you could increase revenue at your hotel by improving your TripAdvisor rating.

Key findings: a one-point increase in TripAdvisor ratings leads to 1% more bookings

'The Effects of Online Review Ratings: A Case Study of the Hotel Industry' provides compelling insight into the influence of online reviews in the hotel industry. A standout finding from this research is the correlation between TripAdvisor ratings and hotel bookings. Specifically, the data reveals that a one-point increase in a hotel’s TripAdvisor rating correlates with a 1% increase in bookings.

What does this mean in real terms?

This statistic might seem straightforward, but its implications are far-reaching for the hospitality industry. Let's break down what this 1% increase in bookings means for hotels:

• Enhanced revenue opportunities: for a hotel with 100 rooms and an average occupancy rate of 75%, a 1% increase in bookings could mean around 275 extra room bookings per year. This translates into substantial additional revenue, especially during peak seasons or in high-demand locations. Understanding the evolution of RevPAR can help you maximise these opportunities.
• Positive ripple effect: more bookings often lead to increased spending at your hotel's restaurants, spas, or other facilities.
• Long-term guest relationships: each new booking is an opportunity to impress a guest and turn them into a repeat customer. Over time, this can lead to a loyal customer base that consistently chooses your hotel, contributing to long-term business stability. Learn more about hotel online reputation management and its importance in building guest relationships.
• Enhanced online presence: improved ratings and increased bookings create a virtuous cycle. Happy guests are more likely to leave positive reviews, further boosting your online ratings and attracting even more customers. Discover how to improve your hotel’s visibility on Google to complement your TripAdvisor strategy.

The importance of managing and enhancing your hotel's TripAdvisor profile can't be underestimated. It goes beyond simply boosting the number of bookings; it's a strategy for driving overall business development and success.

How was the data collected?

The insights we present are based on the dissertation 'The Effects of Online Review Ratings: A Case Study of the Hotel Industry' by Zhu Zhu, submitted to Boston College's Morrissey College of Arts and Sciences in March 2023. This research combines data from two key sources:

• Smith Travel Research (STR): providing comprehensive hotel financial performance data at a property-year-month level.
• TripAdvisor.com: where the historical records of online reviews for hotels in the STR dataset were collected.

Focusing exclusively on 1,188 hotels between January 2000 and December 2019, the study provides a detailed analysis, excluding data from 2020 onwards due to the pandemic’s disruption.

Data from STR, covering a significant portion of the market across major US cities, included essential metrics like occupancy rates and average daily room rates (ADR). These metrics were carefully merged with TripAdvisor's review ratings, using the Python package FuzzyWuzzy, ensuring a high degree of match accuracy between the hotel data and the review ratings.

FAQs about increasing your Tripadvisor ratings

Q: What if my hotel already has a high rating, like 4.5, on TripAdvisor?

A: If your hotel already has a 4.5 rating, aiming for a full 5.0 can still bring significant advantages. Going from 4.5 to 5.0 marks a notable enhancement in guest satisfaction, which can lead to more bookings, higher revenue, and improved competitive positioning. It shows potential guests that you're committed to delivering outstanding service and experiences.

Q: How can I, as a small hotel or B&B owner, compete with larger establishments on TripAdvisor?

A: You can capitalise on the unique strengths of your small hotel or B&B, such as personalised service, local charm, and unique experiences. Encouraging your guests to share their positive experiences in reviews can boost your property’s visibility and appeal on TripAdvisor, helping you stand out against larger hotels.

Q: Can improving my TripAdvisor rating impact other areas of my business?

A: Definitely. Higher ratings usually lead to increased visibility, potentially resulting in more bookings. This boost in business can positively affect revenue from your services and enhance your overall brand reputation. Satisfied guests are also more likely to become repeat customers and recommend your property to others.

Q: How long does it typically take to see a change in bookings after I improve my TripAdvisor ratings?

A: The timeframe can vary. Some properties might see immediate results, especially in high-demand seasons, while for others, the increase may be more gradual. Maintaining high standards of service consistently is key to improving ratings and, consequently, bookings over time.

Q: Are there any risks if I focus too much on TripAdvisor ratings?

A: While TripAdvisor ratings are influential, it's crucial not to let them overshadow other important aspects of your business. Balancing your focus on ratings with maintaining quality service, operational efficiency, and a robust overall marketing strategy is essential for long-term success.

Q: What strategies can I use to improve my TripAdvisor ratings?

A: Focus on consistently delivering excellent customer service, engage thoughtfully with reviews, encourage satisfied guests to write reviews, and use guest feedback to identify and improve areas in your service. For a practical look at how to achieve this, head over to our guide, 'How to get more 5-star reviews'.