Inn Consultants and Brokers Since 1993

Rick Wolf and Peter Scherman (that’s Rick on the left and Peter on the right) are both experienced speakers who have presented on a range of innkeeping related topics at the state, regional, and national level. They gather and analyze research for the Innkeeping industry and welcome the opportunity to share it with others. Contact Us

The B&B Team

Online Reviews Impact Bottom Line

There’s been a lot of news lately about online reviews, and sometimes it’s hard to know how to measure their impact on innkeepers. Well, now we have some great statistics to share. A recent article from TravelMole reported that The Kelsey Group and did a joint research project that focused on hotels (lodging), restaurants, travel, and other areas. The impressive bottom line was that people were willing to pay at least 20% more (and up to 99% more) for services (like lodging) that were rated "excellent" (5 stars) versus "good" (4 stars).

Furthermore, the study showed that 24% of Internet users read online reviews before making a purchase decision, and of those, 40% subsequently stayed at the hotel they reviewed online. Hotels ranked the highest of all categories in that 87% said that the reviews had a significant influence on the decision to book a room. More surprising, still, was that a full 97% said that the reviews were accurate!

So, what does this mean for innkeepers? At The B&B Team we’ve been saying for some time that Travel 2.0 was important for the unique lodging industry. Sure, the studies are looking at hotels, but B&B’s and inns are in the lodging category, and we all know that you’re being reviewed online, like it or not. So, when was the last time you checked out your reviews? If you’re not looking, and if your guests aren’t saying nice things about you, and if the experience you offer isn’t up to your marketing hype, then you’re problably leaving at least 20% of your potential revenue on the table.

To measure that 20% another way, consider this: If your inn could gross 20% more revenue, and your expenses stayed relatively similar to what they are now, that’s a LOT more net operating income at the end of the year. And, in the parlance of inn valuation, if we used a 10% capitalization rate, for every $10,000 increase in net operating income, your inn could be worth $100,000 more! Don’t believe that social media and online reviews have an impact? Think again!


One Response to “Online Reviews Impact Bottom Line”

  1. Mike says:

    Thank you for this information, it’s what I’ve been looking for.