Best practices: The effect of reviews on hotel conversion rates and pricing

Reviews and online user generated content are increasingly important for travelers during the research process and when choosing a hotel. This research was designed to better understand the relationship between review scores, conversion rates and pricing at the point of purchase.

Data about online consumer purchase behaviors was collected by presenting an online panel of travelers with booking engine simulations. 513 respondents were served four fictional booking engines, each displaying three fictional hotels with high/medium/low prices, ranging from $100 per night to $120 per night, as well as varying average review scores ranging from 80-100, on a 1-100 point scale. In each example, respondents were asked to choose one hotel based on price and average review score. This study is the first of its kind using simulated booking engines and heat mapping technology to determine consumers’ hotel choices. Findings show that: 1. Given equal prices, travelers are 3.9 times more likely to choose a hotel with higher review scores; 2. Under scenarios with adjusted prices for hotels with higher review scores, travelers will still pay more for the hotel with the highest review score; 3. When explicitly asked if they will pay more for a hotel with higher reviews, 76% say that they would pay more for a hotel with higher average review scores (on average, travelers will pay 5-9% more for a hotel with a 5% higher review score).