A special report from Womply Research

How do online reviews impact revenue for lodging places?

If you've read our full report, you've already got a sense for just how important review sites are for local businesses. But what about local hotels, motels, bed and breakfasts, and other lodging places?

Are reviews more (or less) influential on revenue for lodging places than other types of local businesses?

Impact of Reviews on Revenue page masthead graphic. A special report from Womply Research.

To understand the correlation between reviews and revenue for lodging businesses, Womply's data science team conducted an in-depth analysis of transactions and online review data for more than 4,500 lodging places in every state.

Key findings include

dropdown section arrow icon

Local lodging places that claim their free listings on 3 or more review sites earn 27% more revenue

Lodging places that don't reply to any reviews earn 10% less revenue

4.5 to 5-star rated lodging places earn below-average revenue—the sweet spot is 3.5 to 4.5 stars

Lodging places with more than the average number of reviews bring in 62% more annual revenue

Lodging places whose total number of reviews are 20-25% negative average 24% more annual revenue than businesses whose reviews are 5-10% negative

Go deeper by reading our analysis for businesses in a different industry.

Claiming free listings

dropdown section arrow icon

Lodging places that claim their listing on multiple review sites make more money

Key findings include

Lodging places that claim their free listings on at 3 review sites or more earn 27% more revenue

Lodging places that don't claim their listing on any review sites earn 32% less revenue

20% of lodging places haven't claimed any review site listings

Google is the most important free listing site for lodging places

The average annual revenue across all lodging places in our study was $510,000. As with all business in our study, claiming your profile on more review sites correlates with more annual revenue.

As you can see above, claiming review site listings is extremely important for lodging businesses. Those who don't claim their profile on one of the major listing sites earn 32% less revenue than the average lodging business. Meanwhile, those who claim even one free listing profile earn near average the average annual revenue for all lodging places in our study.

When lodging places claim their free listing on review sites, it gives them the ability to reply to reviews, add helpful information about their business, and plenty of other things that clearly make an impact on potential customers.

To see how much of an impact this might make on revenue for lodging business, look at the results this way—lodging places who follow the simple practice of claiming their free listing on three or more of the major review sites (Google, Yelp, Facebook, and TripAdvisor) average $140,000 more each year than those that don't claim any of their free listings.

More customers use Google Maps to look for local lodging places when on the road than any other platform. This is a likely reason why lodging places that don't claim their Google listing show the largest decrease in annual revenue.

No matter which way you look at it, though, lodging places should be claiming their business listing on every relevant review site.

Go deeper by reading our analysis for businesses in a different industry.

Read More

Replying to reviews

dropdown section arrow icon

People spend more money at local lodging places that reply to reviews

Key findings include

64% of lodging places don't respond to any reviews

Lodging places that respond to reviews more than 25% of the time earn 35% more than average

Lodging businesses that don't reply to any reviews earn 10% less in annual revenue

Lodging places that reply to reviews 1 to 25% of the time still earn 9% more than average

It's clearly important for lodging places to claim their listings on as many review sites as possible, but they shouldn't just stop there. Our analysis reveals that, perhaps even more than other industries, lodging places should prioritize engaging with their customers by responding to reviews.

64% of all lodging places in our analysis haven't responded to a single review, which is quite a bit less than the 75% of businesses across all industries that haven't responded to any reviews, an early indicator that lodging places may need to be particularly sensitive to responding to complaints online.

The charts above appear to confirm the hypothesis that lodging places should be even more focused on responding to online complaints than other businesses. Lodging places that don't respond to any reviews earn 10% less than the average lodging business.

Once lodging businesses engage with their customers online by replying to more reviews, though, revenue starts to go up. Those that respond to reviews up to 25% of the time earn 9% more each year.

Lodging places that reply to more than 25% of their reviews earn a whopping $180,000 more each year than the average lodging place.

As reply rate climbs to more than 50%, revenue dips slightly. This is likely because lodging places with a large number of total reviews are very popular and well-established, and may be likely to earn more money than average, but may also be more likely to have a much lower review response percentage.

This becomes clear when you look at lodging business revenue by total number of review responses:

Among lodging places who have responded to reviews, the average total number of responses per location is 51.

Lodging places that respond to just one review see an increase in revenue compared to those who don't respond at all, but still earn less than the average lodging place. And, as you can see, lodging places who post the most review responses earn more.

Lodging places who had posted just above the average number of review responses (52 to 100), earn 53% more than the average lodging place in our study. And by the time you get to lodging places who had more than 200 review responses, they're earning well over two times the industry average.

It's clear that lodging places, perhaps more than any other industry, should focus on engaging with their guests on online review sites by posting thoughtful responses to both positive and negative reviews.

Go deeper by reading our analysis for businesses in a different industry.

Read More

Star ratings

dropdown section arrow icon

How much does a lodging shop's star rating impact revenue?

Key findings include

Lodging places with a rating between 3.5 and 4.5 stars earn more revenue than any other rating

5-star lodging businesses earn average revenue

Lodging places with a 3.5 to 4-star rating earn 19% more than average

13% of lodging businesses have lower than a 3-star rating

Now that we've discussed things that a lodging business owner can control when it comes to review sites, let's get into the reviews themselves. We'll begin with what many lodging business owners consider the most important part of their online presence—their overall star rating.

The chart below illustrates how much the average star rating matters to revenue at lodging places.

As you can see, lodging places appear to be more sensitive to negative ratings than other industries. Lodging places with 2.0 to 2.9 star averages earn substantially less in annual revenue than similarly-rated businesses across all industries.

Interestingly, 5-star lodging places actually perform much better than 5-star businesses in other industries do. However, lodging places with a star rating between 3.5 and 4.5 earned far more than any other ratings group.

And with only 15% of lodging places in our analysis falling outside of the 3 to 4.9-star range, you can see why a lodging place's overall rating is only a small part of a much bigger picture.

Go deeper by reading our analysis for businesses in a different industry.

Read More

Number of reviews

dropdown section arrow icon

How much does the number of reviews matter for lodging places?

Key findings include

Lodging places with more than the industry average of 151 total reviews earn 62% more in annual revenue than average

Lodging places with fewer than 151 total reviews earn 25% less in revenue than average

Locations with 300 reviews or more earn 87% more than average

An above-average number of reviews on Google has the largest positive impact on revenue of all review sites

Lodging business owners often stress about their star rating, but as you can see in the section above, average star rating isn't necessarily the clearest indicator of financial success for local lodging places.

On the other hand, our findings suggest that lodging business owners should perhaps focus much more on increasing the amount of reviews than almost anything else.

Lodging places in our analysis average a combined 151 reviews per business across all review sites, so we started by analyzing revenue at lodging places whose review counts fall above and below that average 151 review threshold.

As suspected, total number of reviews is indeed extremely important for local lodging businesses.

Those who have more than the average number of reviews earn 62% more in annual revenue than businesses with below-average review counts, while those with less than 151 total reviews earn 25% less than the average lodging place.

Looking closer at the numbers helps clarify the relationship between the number of reviews and an increase in average revenue.

Lodging places with fewer than 50 reviews earn 35% less than average, while those with between 51 and 100 reviews earn 29% less. Once lodging places climb near the average range, with review counts between 101 and 151 reviews, revenue climbs to 5% more than average.

Then, as you can see, the more reviews a lodging business gets, the more money they earn. Annual revenue at hotels, motels, inns, and bed and breakfasts with more than 400 reviews is a whopping $454,000 more than the average lodging place—strong evidence that when a curious traveler searches for a place to stay, a large number of reviews outweighs a high star rating.

Once again Google is clearly the most important review site for lodging places, as those with an above-average review count on the site earn 65% more than the average lodging place.

Regardless of the platform, local lodging places would be well-advised to get as many reviews on as many sites as possible. Even if some of those are negative reviews (which isn't necessarily a bad thing, as we'll clarify below), there's little question that customers value the number of reviews (or other factors) more than they do a 5-star rating.

Go deeper by reading our analysis for businesses in a different industry.

Read More

Fresh vs stale reviews

dropdown section arrow icon

Fresh reviews are crucial for lodging places

Key findings include

Lodging places average 16.8 fresh reviews (posted in the last 90 days)

Locations with more than 16 fresh reviews earn 63% more than average

Lodging places with less than 16 fresh reviews earn 23% less than average

Lodging places with 30 or more fresh reviews earn 79% more in annual revenue

The number of reviews a lodging business has on review sites is clearly important, but how important is the "freshness" of those reviews?

The average total number of fresh reviews, (reviews posted within the past 90 days) per lodging business in our analysis was 16.8. This is greater than the average across all industries, continuing the theme of lodging places receiving more consistent reviews than some other businesses.

We started by examining how much it affected a lodging place's revenue if they'd received fewer or greater than 16 reviews in the past 90 days.

As you can see in the charts above, getting new reviews is just as important for lodging places as amassing a lot of total reviews. Those who don't bring in any fresh reviews in the past three months days earn 20% less revenue than average. Getting a few fresh reviews helps, but those with a below-average number of fresh reviews (1 to 6) still earn 4% less than average.

Getting more than the average number of new reviews, on the other hand, correlates with a 30% increase in revenue. This suggests consumers may put a premium on recent reviews and might be more likely to patronize a lodging business with fresh customer feedback.

Breaking this down even further, we can see that lodging places with just 1 to 8 fresh reviews (again, fresh means posted in the last 90 days) earn 31% more than those with no new reviews.

Lodging places who get more than 25 fresh reviews, meanwhile, earn 41% more than the typical lodging business. Put another way, getting just 8 to 9 new reviews per month correlates with an extra $93,000 each year for local lodging places.

The takeaway is that lodging places should focus on getting a steady stream of real, recent reviews rather than trying to chase a perfect star rating. And, even a handful of fresh reviews clearly holds more weight than glowing reviews from last year.

Go deeper by reading our analysis for businesses in a different industry.

Read More

Impact of negative reviews

dropdown section arrow icon

Customers expect to see negative reviews of lodging places

Key findings include

31% of the average lodging place's reviews are negative

Lodging places whose reviews are 20 to 25% negative earn the most

Lodging places whose reviews are 0-5% negative earn 14% less than average

Lodging places whose reviews are 35 to 50% negative still earn 1% more than average

It's clearly important to get a steady stream of fresh reviews, but how important is the ratio of positive to negative reviews?

We analyzed the total number of reviews each lodging shop in our study received, and on average, 31% of the reviews posted about a given lodging business were negative.

This makes lodging places the most negatively reviewed small business root category in our study. So what does this mean for local lodging businesses? Let's find out.

As you can see in the charts above, lodging places appear to be more likely to get a large number of negative reviews than the average business across all industries. But, as is the case with all other industries, the lodging places that earn the most money are those with a healthy mix of positive and negative reviews.

Lodging places with 10 to 35% negative reviews earn more than average, with lodging businesses whose reviews fall between 20 and 35% negative earning the most.

Even lodging businesses whose reviews are 35 to 50% negative earn more than those whose reviews are only 0 to 5% negative.

This is likely due to a number of factors, including lodging businesses in that sample having a larger total number of reviews, but it's clear that a business owner shouldn't be overly concerned about getting a bad review.

When customers browse lodging business listings on review sites, they likely expect to see some negative reviews. A business with little or no negative reviews might appear untested or even a little "too good to be true."

Our takeaway: lodging places that focus on getting as many real reviews as possible reap the rewards.

Go deeper by reading our analysis for businesses in a different industry.

Read More

Kindest and harshest states for reviews

dropdown section arrow icon

Where in the U.S. are consumers kindest (and harshest) to lodging places in reviews?

Next we analyzed online reviews on a state-by-state level to see which parts of the country are kindest (and harshest) in their reviews of local lodging places.

rank state positive review rate
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

Vermont lodging places were the best reviewed in the country, averaging a positive review rate of 81%. Colder, northern states seemed to do better across the board, with Alaska, New Hampshire, and Maine coming close behind. Hawaii proves to be the sunny exception to the rule, with the 5th best-reviewed lodging places in the country.

Georgia's lodging places were the worst reviewed, averaging a positive review rate of only 58%. Mississippi, Oklahoma, Connecticut, and Illinois all also fell in the bottom five for worst-reviewed states for lodging places.

Go deeper by reading our analysis for businesses in a different industry.

Read More

States best at managing online presence

dropdown section arrow icon

Where in the U.S. are lodging places the best at managing their online presence?

Next we looked at which states' lodging places were the best at managing their online presence. We started by analyzing the percentage of lodging places in each state that had claimed at least one review site listing.

rank state claimed at least one listing
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

An impressive 95% of North Dakota lodging places had claimed at least 1 review site listing, which earned them the top spot on our list. Rhode Island, Massachusetts, Wyoming, Connecticut, and Utah also had 90% or more of their lodging places claim at least 1 review site listing.

On the other end of the spectrum, 34% of lodging places in Alabama haven't claimed a single listing, putting them at the bottom of the list. Delaware, Arkansas, and Kentucky join Alabama at the bottom of the list, with over 30% of lodging places in each state also not having claimed a single review site listing.

Lastly, we looked at how frequently businesses in each state responded to reviews.

rank state responded to at least one review
FL TX NM AZ AK CA NV UT CO OR WA ID HI OK MT WY ND SD NE KS MN IA MO AR LA MS AL GA SC IL WI MI IN OH TN KY NC WV VA PA NY ME VT NH RI CT NJ DE MD MA DC

53% of North Dakota's lodging places responded to at least one review, making them the most engaged state. Nevada lodging places came in second, with more than half of their businesses having responded to at least one review.

Delaware lodging businesses were the least engaged, with only 17% having responded to at least one review. Perhaps most surprisingly, Rhode Island, despite 94% of businesses having claimed at least one listing, had only 18% of their lodging places respond to at least one review.

Go deeper by reading our analysis for businesses in a different industry.

Read More

Conclusion

dropdown section arrow icon

Conclusion

Online reviews are the digital age's word of mouth. Local lodging places that recognize and respond to how consumers use the internet to find, evaluate, and choose where to spend perform better financially than those that don't.

Specifically, local lodging places experience the best revenue performance when they:

  • Claim all their free business listings on relevant review sites
  • Are highly responsive to customer feedback posted on review sites
  • Get and maintain a star rating between 3.5 and 4.5 on key review sites
  • Receive a steady flow of authentic reviews
  • Have a credible review profile, comprised of about 15-35% negative reviews

Go deeper by reading our analysis for businesses in a different industry.

Read More

Do you own or manage a small or local business? With Womply, you can read and respond to your customer reviews on Google, Facebook, Yelp, and more - all in one place. Saving you time and earning you money.

Get your free 15-minute demo and see why Womply is the #1 marketing and CRM software solution used by over 150,000 businesses and growing!

Learn how businesses that use Womply:

Icon showing increased revenue

Earn 20% more revenue

Icon showing repeat customers

Get 22% more repeat customer visits

Icon of a clock

Save 10 hours per week, on average

By submitting this form you agree to Womply’s Services Agreement