SGS : The Online Revolution in the Hospitality Industry

The online landscape for hotels has changed. The competition a hotel faces is no longer just another hotel but the online technology that drives customers to its doors. Twenty years ago, it was acceptable for a hotel to use a website as a passive supplier of information to potential customers but today consumers are used to interacting with businesses via the internet.

Currently, 88.1% of the population in North America is online, 80.2% of Europeans are online, with lesser but growing percentages in the other areas of the world. Globally, 3,885,567,619 people were registered as online users in June 2017 and this trend is to continue with service providers seeking to exploit new territories For hotels, this provides an opportunity to reach larger numbers of potential customers in a way that would have been unimaginable a few years ago. The ability to reach more customers is tempered, however, by the ease with which customers can review establishments and the potential damage a negative review can achieve.

The impact of social media on the tourism sector cannot be underestimated. Social media now has a major impact upon the hotel and travel choices of both individuals and businesses. Social media platforms, such as Facebook, Instagram, Twitter, Youtube and LinkedIn, can be seen as trusted sources of review by potential customers. It is estimated around 69% of online people will use social media when considering booking a trip, with 44% of customers acknowledging they would only book a hotel after reading an online review. Studies have also shown that 74% of travelers will now write some form of online assessment of their trip.

A recent article in the UK Hotel Industry magazine suggested, on average, guests pack three portable electronic devices for a weekday stay and five for a weekend stay. These guests are remaining 'online' during their stay and it is normal for them to comment about their stay on social media.

Facebook, on which hospitality brands have the largest median audience size, has over 800 million active users. Each account is linked to, potentially, an enormous number of other accounts, meaning information and comments can very easily reach large numbers of people, and at great speed. This can be both positive and negative but it must not be underestimated by brand managers - 52% of Facebook users indicated that the photographs on their friends Facebook page had a direct impact upon their decisions when booking future holidays.

TripAdvisor

In the tourism sector, TripAdvisor has become the globally dominant online platform. Each year, it is estimated TripAdvisor is responsible for over $10 billion in online travel purchases in the US alone. It lists over 890,000 establishments, covering more than 45 countries. The site holds one of the largest collections of photographs in the online world and has a resource of well over 200 million reviews. Every month, these reviews are accessed by over 260 million unique users.

A major influence on the choices made by consumers is the rating given to them by TripAdvisor. Where a business is ranked in a list of local establishments can have a major effect on bookings. Businesses that are not listed in the first five positions on TripAdvisor, do find they lose business to their competitors. For small businesses, without the financial resources to turn around a negative review, a relatively small number of bad reviews can be catastrophic.

The Danger of Online Reviews

Research has shown that up to 98% of people believe TripAdvisor reviews are trustworthy. Consumers are willing to believe social media reviews because they think they are written by people like themselves. The perception is that these reviews are unbiased and are therefore trustworthy. In the case of Facebook and Twitter, it is probable the consumer has a direct relationship with the contributor and so knows whether their opinion will correspond to their own. In the case of online review sites, however, this filtering factor is reduced.

There have been several instances where positive reviews have been shown to be written by members of staff. In other cases, disparaging reviews can be the work of competitors trying to sully a brand. Even if the review does come from a person who is independent and who has stayed at the hotel, it does not necessarily follow that the review is trustworthy. Review sites have tried to democratize the reviewing process but this means there is no single standard being applied to all comments. Industry executive, Paul Kerr, while acknowledging the importance of online reviews, states there needs to be a way to 'cull the rampaging herd.'

The assumption is, the person reviewing is like 'me' and the problem is, they aren't. The reviewer may come from a very different background, have very difference experiences of the types of hotel they are staying in. From this perspective, it is clear to see their review will be biased, either positively or negatively. In either instance, the value of the review is diminished.

Why Hotels Should Take Note

Hotels must acknowledge that their customers will be using social media before they book a trip, during the trip and after the trip and so they must be ready to respond to this in real-time. They can no longer afford to use the same systems that worked effectively 20-30 years ago. Technology has moved on and the hotel sector must adapt to utilize it.

The key to success is a reliable online reputation management (ORM) system that can engender a positive image across the internet. Accommodation staff, tour guides and restaurant managers need to consider ways in which positive comments can be encouraged. This can be through positive reviews on TripAdvisor or the sharing of unique content on social media. The days of ignoring negative comments are gone, the hospitality sector must be prepared to use social media to its advantage and be ready to respond to negative observations in an appropriate way.

For further information, please contact:

Peter Hvidberg
Global Business Manager, Hospitality
t: +41 22 739 94 76

References:

World Internet Users Statistics and 2017 World Population Stats
Impact of Social Media on Tourism and Hospitality
The Rise of Anti Social Media: New Research Reveals Hotel Guests Would Swap Personal Service for Better Tech
Impact of Social Media on the Hotel Industry
Social Media Use in European Hotels - Research Portal l Lancaster University
The Impact of Social Media on the Tourism Industry
Social Media Use in European Hotels - Research Portal l Lancaster University
Impact of Social Media on Tourism and Hospitality
Impact of Social Media on Tourism and Hospitality
The Digitally Transformed Consumer, Friend or Foe?
Harness social media to boost your hotel business in 2016 l Hotel Industry Magazine