Boosting Rates with Reputation Pricing: Leveraging Your Hotel’s Reputation for Revenue

In the past, hotel revenue managers relied solely on predicted demand and competitors’ rates to optimize pricing. Guests, unfamiliar with the quality of a hotel, viewed price as the primary quality indicator. The advent of online reviews transformed this landscape, offering value transparency and introducing the concept of reputation pricing.

What is Reputation Pricing?

Reputation pricing incorporates a hotel’s online reputation into its rate-setting strategy. It aligns room rates with the quality of experience guests expect, their perceived value, and their willingness to pay.

How Reputation Impacts Pricing Strategies

A positive online reputation boosts occupancy and profitability. Research indicates that properties with better reviews rank higher in search results, leading to more bookings and higher rates. Studies show that a one-point increase in user review score can justify an 11.2% price increase without affecting occupancy.

The Effects of Negative Reviews

Negative reviews decrease perceived value. Lowering rates to compensate for poor reviews is ineffective. Instead, focus on addressing the issues causing negative feedback. A single bad review can deter up to 30 potential guests.

Six Steps to Improve Reputation and Increase Rates

1. Understand Your Online Reputation: Collect and analyze guest feedback, both direct (surveys, reviews) and indirect (social media mentions, loyalty program participation).

2. Know Your Competitors’ Reputation: Understand and highlight how your hotel offers better value compared to competitors.

3. Know Your Guests: Tailor experiences based on guest segments and preferences to enhance perceived value.

4. Assign a Monetary Value to Reputation: Use data to determine if you can raise rates based on your reputation without harming occupancy.

5. Improve and Maintain Reputation**: Encourage and respond to feedback, prioritize operational improvements, and maintain consistency in service.

6. Use Reputation Pricing with Other Strategies: Combine reputation pricing with competitive, demand-based, and profit pricing strategies.

Technology’s Role in Reputation Management

Reputation management systems (RMS) integrated with hotel PMS, channel managers, and booking engines can streamline reputation pricing. These tools help collect and respond to guest feedback efficiently.

Top Reputation Management Tools

1. Cloudbeds: AI-powered review management and real-time messaging.
2. GuestRevu: Consolidates reviews and feedback.
3. Hotels Quality: Focuses on marketing automation and upselling.
4. myHotel: Sends guest surveys and monitors online reviews.
5. Reputize: Engages with guests to resolve issues promptly.
6. StayFI: Leverages guest WiFi for engagement.
7. TrustYou: Assesses online reputation with a proprietary scoring system.
8. Xperium by RepUp: Automates review monitoring and guest communication.

Driving More Bookings with Higher ADR

Reputation pricing integrates revenue management, sales, marketing, and operations. By understanding guest expectations, maintaining a positive online presence, and making informed pricing decisions, hotels can effectively leverage positive reviews to drive more bookings and achieve higher average daily rates (ADR).