Leveraging Social Big Data in the Hotel Industry

In the internet age, it is well known that the phenomenon of information being vast, complex, and real-time is most evident on social media. In the previous article, I mentioned data from review-based social media, the most familiar of which is customer ratings and reviews on hotel booking websites—Online Travel Agencies (OTAs), such as TripAdvisor, Ctrip, Agoda, and Booking.com.

Since the birth of the internet, hotel room sales have gradually formed a symbiotic relationship with OTAs. According to research by Cornell University, the rate of direct online bookings for hotels has been declining year by year, while the share from OTAs continues to rise. Increasingly more facts and research show that, besides price being a major factor in determining sales performance (high sales do not necessarily mean good revenue), online customer reviews have a significant impact on a hotel's reputation and customers' booking decisions.

According to the "TripBarometer Global Travel Economy Report," the world's largest accommodation and traveler survey report released by market research company IPSOS, 93% of travelers' hotel booking decisions are influenced by online reviews. At the same time, 96% of surveyed hotels stated that online reviews are important for customers' online booking behavior. When a hotel has higher ratings on OTA websites, it can increase the room price by up to 11.2% while maintaining the same occupancy rate. Furthermore, according to the 2012 research report "The Impact of Customer Reviews on Consumer Decision Making" by Cornell University, it specifically pointed out how online reputation ratings of hotel brands affect consumer choices, mentioning three indicators:

Rating Rank: When the rank drops by one level, the probability of being chosen by customers decreases by 11.5%.
Review Score: When the customer rating increases by one point, the probability of being chosen by customers increases by 14.2%.
Number of Reviews: For every additional customer review, the probability of being chosen by customers increases by 0.2%.

Timely Strategy Adjustments are Crucial

In recent years, consumers have become increasingly savvy in judging the authenticity of online information. A single review score is not enough to form the basis of a final decision; they often make their final choice by reading numerous review texts and comparing reviews across different OTAs. For hotels, industry competition is becoming increasingly fierce, and the volume of information from consumer reviews is exploding. The days of making operational and market decisions on a monthly or quarterly basis are long gone. The need to make strategy adjustments weekly, daily, or even every minute, and to provide immediate feedback on guest opinions, is becoming more and more significant. However, relying solely on manual collection and understanding of the vast data from numerous OTAs is impractical. Statistics show that the vast majority of review data comes from about 20 OTAs, while reviews on hundreds of other OTAs are not active or mostly cite data from the previously mentioned OTAs. Therefore, Social Big Data Analytics tools offer the possibility of real-time collection, analysis, and insight generation.

Firstly, Big Data Analytics can collect ratings and review texts from different OTAs in real time. Through algorithms and weights, it can instantly calculate the hotel reputation value, which has indicative significance, and obtain the hotel's ranking in the local industry and among peer hotels at different times. Hotels can use these indicators to constantly check their market position, customer perceptions, and changes, and even track the original scores and reasons forming these reputation values.

Tracking User Preferences and Identifying Hotel Shortcomings

Secondly, Big Data Analytics can quickly capture customer evaluations of hotel services or facilities. Through real-time visual analysis, hotels can immediately identify areas that are lacking and need immediate correction or refinement, areas that are doing well but not highly regarded by customers, and key areas mentioned by a few customers but often overlooked by the hotel.

Additionally, hotels can adjust market strategies, improvement plans, and make effective resource allocations on different OTAs based on the customer review volume, classification, preferences, and criticisms presented by Big Data Analytics. This will enhance the hotel's reputation and booking revenue in the eyes of customers. In the era of big data, leveraging big data tools will make businesses more competitive.

Dr. Angus Cheong Chairman of the Asia-Pacific Internet Research Alliance and Chief Data Consultant of uMax Data

(Originally published in Hong Kong Economic Times, reprinted with permission)

Enhancing Reputation and Revenue in the Hotel Industry with Social Big Data 【Dr. Cheong's Data Insights 8】