If a guest writes a negative review on a site like TripAdvisor this undoubtedly impacts the price a future customer will be willing to pay for a room. On the other hand, positive reviews, which boost rankings, can allow hotels to apply a more aggressive pricing strategy. It is tricky getting the balance right but one thing is certain, today revenue management and reviews are inseparable.

Thailand’s Onyx Hospitality Group understands only too well how user-generated content (UGC) impacts its pricing decisions. In fact the group has developed a way to assess UGC from various international sites. This helps its operations team to identify ways improve guest satisfaction and, at the same time, allows the revenue management team improve their pricing strategies.

The strategy has been applied at the Oriental Residence Bangkok, an independent property managed by Onyx. In six months the hotel rose from a ranking of 756 on TripAdvisor to the number 1 slot. With the resulting improvement in so-called value perception, the group decided to raise its prices. EyeforTravel’s Ritesh Gupta spoke to Stefan Wolf, vice-president revenue management, Onyx Hospitality Group who shared some of the lessons learnt on the road to making pricing decisions based on value perception.

EFT: Moving from a ranking of 756 to number 1 on TripAdvisor in just six months is an impressive achievement. How did you do it?

SW: Any new property opening in Bangkok will by default be starting at the last place and will move up depending on the ratings achieved by the consumer staying at the property. Oriental Residence Bangkok offers exceptional service. This was recognised by the consumer and resulted in five out of five for almost every rating  - that led to the improved ranking in just six months.  

EFT: How did this impact your pricing decisions?

After opening with a special rate, and encouraged by positive ratings, the revenue management team priced the hotel in line with other Five Star properties in Bangkok. Once the comments and rankings increased the hotel raised prices, but apparently too much at first. Despite the positive ratings demand reduced and our ratings fell. So we reverted back to a more aggressive pricing strategy. Demand picked up again and with continuous positive ratings the property achieved the no 1 position once again. The RM team is now gradually increasing the price while constantly reviewing comments about value perception.

EFT:  As RM increasingly applies value perception to pricing, should RM and social management teams work together?

SW: Yes, in fact in our company the revenue and distribution teams on the property also handle social media so they are already integrated. Demand analysis on its own is not sufficient to create an optimal pricing strategy. Value perception pricing in combination with demand analysis gives better results. Therefore an integrated approach to social media and RM is important. 

EFT: What sort of challenges did a ranking of 756 posed to the RM team?

SW: The challenge in the beginning was the non-available data of value perception. Only with comments from guests over an extended period of time was there enough data available to make informed decisions to take value perception into consideration for pricing.

EFT: How is a hotel affected by a low ranking on TripAdvisor?  

SW: Since this was a new hotel our initial ranking was purely based on having no comments. However this meant that we did not get business from guests looking at TripAdvisor. This has changed tremendously since the rankings moved up as was evident through demand from OTA’s and via our own website.

EFT: Did RM play a role in getting the hotel to the top slot?

SW: This achievement was only possible because of the exceptional service delivered by the operations team, which was recognised by the consumer. Revenue Management helped to increase demand once the ranking was up and the correct price positioning has been identified using value perception analysis principles.

EFT: It seems analysing user generated content can help achieve incremental profits. What are you top tips be for the industry?

SW: It would be to involve revenue management in the analysis of user-generated content, which is not common at the moment. Social media is still used very inconsistently by all kinds of departments. In my opinion revenue and distribution teams should take the lead in analysing UGC and take the results into consideration for value perception pricing.

No matter how much discount you give if the rankings are low, the value perception will be low (justified or not) and demand cannot be stimulated enough to generate incremental RevPAR. So RM has to work with the operations teams to improve rankings, which will lead to an opportunity to raise prices. This will ultimately lead to incremental profitability.

For more insights from Stefan Wolf, vice-president revenue management, Onyx Hospitality Group join us at the Travel Distribution Summit in Singapore from May 28-29