The Tie Between RevPAR Index and TripAdvisor
The growth of TripAdvisor has changed the way many hotels operate and measure their success. With more than sixty million unique visitors every month and more than seventy-five million reviews, TripAdvisor is hands down the largest review site in the travel space. As a result, hotels have realized the impact that TripAdvisor reviews are having on their business.
A few years ago, one of Revinate’s early clients, an independent boutique hotel in upstate New York, noticed a trend involving their RevPAR (Revenue per Available Room) Index % and TripAdvisor that the owner wanted to track. They noticed that because they were consistently ranked number one on TripAdvisor’s Popularity Index the margin that they outperformed their competitive set in terms of market share continued to grow, further separating them from the competition.
The owner of the hotel says, “We provide an excellent level of service and have a great product, which allows us to consistently receive great reviews and rank number one or two on TripAdvisor in our market. The only thing that has changed substantially over the last few years is TripAdvisor’s exponential growth. TripAdvisor and its incredible reach has had the biggest influence in our ability to outperform our competitive set.”
This client’s market share numbers according to STR prove this point. The growth in TripAdvisor visitors from 2009 to 2011 mirrors the growth in RevPAR that this hotel experienced. In 2009, the hotel’s RevPAR index was at 120% when TripAdvisor had about 40 million visitors per month. As TripAdvisor grew so did this hotel’s RevPAR advantage. By 2011, their #1 ranking on TripAdvisor supported a RevPAR index of 145% fueled by the increase in TripAdvisor’s influence – now 60 million visitors per month. Simply put, as TripAdvisor increased in influence, this hotel was able to double their RevPAR advantage.
Much is said about how a high TripAdvisor ranking can drive bookings, but as the economy improves and travel spending increases, hotels with an edge on TripAdvisor are better positioned than their competitive sets to increase RevPAR and profitability. As a result, hotels who dedicate time and resources to ensuring a high ranking by providing excellent service, find opportunities to surprise and delight guests and encourage guests to write reviews when they return home will be clear winners in their markets.