Book Discription
Bachelor Thesis for Obtaining the Degree
Bachelor of Business Administration in
Tourism and Hospitality Management
Submitted to Dr. Florian Aubke
Anna Beneder
The influence of Social Media on Revenue Management in Hotels
Social Media: Problems and Potential
2018 is an interesting time for revenue managers to explore the impact of social media. In recent years, platforms like Facebook, Twitter, and Instagram have become the go-to channels for communication between businesses and customers.
- Customers now rely heavily on social media to gather information from other users before making decisions.
- This phenomenon is often referred to as “electronic word of mouth.”
Research has shown that online reviews and social media can significantly influence consumers’ travel plans. Feedback can spread quickly through platforms like Twitter, with customers sharing their experiences in real-time.
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On the flip side, businesses now have the ability to engage with customers more directly than ever before. They can address complaints, build brand awareness, and even drive sales through social media interactions.
However, it’s important to note that the perceived benefits of social media are not without drawbacks. Recent events like the Cambridge Analytica scandal and Wetherspoons’ decision to completely withdraw from social media suggest that it’s time for revenue managers to take a more objective approach when using these platforms.
- Is maintaining an active social media presence worth it if it doesn’t lead to increased revenue?
- Are our current beliefs about social media effectiveness in need of reevaluation?
Social Media and Hotel Revenue Management
For hotel revenue managers, the key challenge lies in determining how exactly social media contributes to pricing strategies and whether the resources allocated to social media engagement are generating a worthwhile return on investment (ROI).
Understanding the impact of customer interactions on revenue is a complex task due to constantly evolving technology. However, studies have shown that improving reputation through online reviews does result in higher revenue per available room (RevPAR), occupancy rates, and average daily rates (ADR).
With this in mind, revenue managers should prioritize efforts to enhance their online reputation as part of a larger strategy aimed at driving revenue growth. For example, upgrading a hotel’s average review rating from 3 stars to 4 stars has been proven to lead to significant percentage increases in ADR.
While social media can be an effective tool for managing reputation, it’s crucial to approach it with caution. Poorly executed strategies can be costly, and the internet is filled with examples of businesses going viral for all the wrong reasons.
- Social media should complement existing revenue management strategies rather than replace them.
- It’s essential to strike a balance between driving direct sales and maintaining a strong online presence.
Remember, directing customers to a poorly designed website will yield little results. Instead, focus on aligning your social media efforts with your overall revenue management goals
Strategies for effective use of social media
Revenue managers can advise businesses on how to integrate social media use with pricing strategies for maximum impact and strategic synergies. Some general strategies that are widely held to be successful are:
- Aim for the broadest appeal. Avoid divisive subjects like politics and commenting on controversial news items: reputation can go down as well as up.
- Do not over post. Limit the amount of promotional posts and aim for impact over quantity of content.
- Consistency. Post on a schedule and be consistent and plan the posts to leverage events and seasonal factors.
- Engage with current customers. Getting current customers to follow you can improve repeat business.
Social media is no longer simply another form of advertising or public relations, but offers the chance to support revenue management strategies with a strategic focus on driving sales and increasing revenue.
The importance of social media is clearly identified for various forms of businesses. Intangibility and high involvement of customers in the hospitality industry are crucial factors of adaptation. The new way of communication supports the hotels in identifying the customer’s needs and wants in order to achieve high guest satisfaction.
This new open data can not only be used for marketing purposes but also to support strategic decisions in the area of revenue management. In order to identify opportunities of the new media and also challenges, interviews with revenue managers of hotels in Vienna were conducted. The previous studies and the qualitative research will help us to understand possible ways of integrating social media into strategic planning.
Facebook, Twitter & co. are a fix part of our everyday life. Everybody with an internet connection is able to participate in various ways. This part of the online world also influences the hospitality industry and their guests.
A connection to Revenue Management (hereafter referred to as RM) cannot be drawn easily and is looking for investigation. The different forms of Social Media (hereafter referred to as SM) platforms can be grouped by content or activities, such as:
- social news (e.g. Digg, Sphinn, Newsvine)
- social sharing (e.g. Flickr, YouTube)
- social networks (e.g. Facebook, LinkedIn, Twitter)
- social bookmarking (e.g. Pinterest, Delicious)
- social review sites (e.g. TripAdvisor, Yelp)
- social purchase/review sites (e.g. Amazon, Booking)
- blogs (Jones, 2009; Noone, McGuire & Rohlfs, 2011).
Due to the technological development we do recognize a shift to online communication also described as electronic word of mouth (hereafter referred to as eWOM).
