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Guest Satisfaction vs Revenue: Things to Think About

A recent post from Daniel Edward Craig on the 4 Hoteliers site (and re-posted in other places) has caused me to reflect a bit on the "business is business" side of things, as compared to the warmer, fuzzier, guest satisfaction side. The article from Daniel Craig was based on a question he had received, asking if your hotel ranks at the top on TripAdvisor, are you not charging enough? Daniel surveyed a number of lodging professionals (hoteliers and consultants), and received a variety of answers. He concludes that there is no consensus, but clearly the benefits outweigh any costs. From reading the article, it appears that by his conclusion, Daniel is saying, in essence, that being at the top on TripAdvisor is worth more than could be gained by a price increase which could cause a drop in TripAdvisor rank. A bit of context The question of raising rates, at the possible expense of TripAdvisor ranking, is essentially analogous to the concept of revenue management. That is, the approach used by airlines, many larger hotels, and sometimes other businesses, to use a fluctuating rate scale, rather than posted rates. Thus, when there is lots of available inventory, prices are relatively low. As inventory shrinks (fewer available rooms), rates increase. Other factors, such as holidays, may also play into the rate ultimately charged. Using that analogy, then, the theory behind the question would be that there is a "sweet spot" where rates are increased until the TripAdvisor position slips down, just below the top group of properties. If this theory were viable, a property would be maximizing its revenue by charging more than its competitors, while not losing enough occupancy to reduce overall revenue. The profits would be gained by (a) increased room rates, and (b) reduced costs due to slightly…

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