Customer Ratings In Tourism: Untapped Potential For Travel And Hospitality Companies

Around 60 percent of travelers worldwide use customer ratings in their purchasing decisions when planning vacations, while 43 percent regularly leave ratings themselves. Even though most travel sector companies are aware of how important ratings are, only about 20 percent of the firms surveyed currently have an effective strategy to deal with bad ratings.

These were the key findings of study Trend Radar 2019 – The Rating Economy (Focus on Tourism)* by the global pricing specialists Simon-Kucher & Partners.

Travel companies recognize the power of ratings… but don’t act

The study found that, when making a purchase, ratings are the third most important factor after product features and price, which means they are even more influential than brand in the decision-making process.

Many companies already recognize the key role ratings play in business. In fact, 55 percent of companies surveyed consider ratings “very important”. Four out of five companies surveyed even expect the importance of ratings to increase over the next three years, primarily affecting brand development, sales, and pricing.

“Hoteliers, in particular, have known for years that customers’ trust in established providers can decrease very quickly due to low customer ratings. Our project experience confirms that there is a clear correlation between damage to reputation and weaker sales figures.  But what’s more surprising is that, when making strategic decisions, the companies surveyed only incorporate these findings to a limited extent” says Dimitris Hiotis, Global Head of the Leisure, Travel and Transportation practice and at Simon-Kucher.

Companies have yet to adapt their business strategies

Only a fifth of providers state that they have a clear strategy for handling ratings, whereas 27 percent use ratings as KPIs. Just six percent draw conclusions from direct customer feedback to improve their product and quality management.

“There’s enormous untapped potential here. If companies focus on four or five of the most common criticisms, they can reduce their risk of receiving low ratings,” Dimitris adds. Ideally, this will also prevent the number of bookings from falling. In fact, 33 percent of the consumers surveyed said that they had decided not to book a particular offer due to poor ratings or opted for a higher-rated alternative.

The study also shows that, in addition to actively managing their weaknesses, companies can benefit financially from nudging satisfied customers to leave ratings, since high ratings can increase the price customers are willing to pay for a hotel or trip.

Interestingly, 50 percent of the consumers surveyed said they would be more inclined to rate their experience if they were offered something in return. “The rating process should be straightforward and encourage customers to leave ratings,” explains Rosalind Hunter, Senior Director at Simon-Kucher. “Currently, companies in the travel and hospitality industry are leaving a huge amount of possibilities untapped. Companies need to recognize that a professional strategy for improving their ratings can positively grow both their top- and bottom-line.”

 

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