Revenue management PRICING OUT SOCIAL

Members of Magnuson Worldwide

Members of Magnuson Worldwide, such as the Bay Pointe Inn Shelbyville, in Michigan, can earn brand rebates based on social scores.

Members of Magnuson Worldwide, such as the Bay Pointe Inn Shelbyville, in Michigan, can earn brand rebates based on social scores.


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A hotel’s social reputation can have a big impact on a guest’s willingness to book, and hotel operators are tying the information they can glean from social networks into their revenue management strategies. Hotel Management spoke with Tom Magnuson, CEO of hotel services organization Magnuson Worldwide, on how social sentiment analysis and revenue management are becoming linked.

“We try to find what is the best data that’s going to give us a sound foundation for a good pricing strategy, and utilizing review data is going to be one of the key anchors of our revenue management strategy going forward,” Magnuson said.

While Magnuson said revenue management in hotels has not been quantified to the extent it has in other sectors, such as retail, incorporating analysis of social media can provide another valuable signal on which revenue managers can base their judgments. “I’ve found that there is no certifiable science of revenue management, just as there is no certifiable science in public relations,” he said. “It’s largely guided by a collection of personalized ad hoc decision points. The best strategies are pretty basic.”

Magnuson Worldwide aggregates content from hundreds of review sites for each of its hotels, Magnuson said, assigning an overall rating from zero to five for each site. The company then factors those ratings into an overall score on a 100-point scale.

Analyzing social content can help hotel operators understand what guests think about their properties, and price accordingly, Magnuson said. “We advise a hotel first on what the public sentiment is about the hotel, and what to do about it,” he said. “Once we have information on what the customer thinks of us, then we act on that; this will guide our pricing. You can generally gain at least a 10-percent premium.”

Social sentiment analysis can also be useful in driving brand compliance, Magnuson said. For Magnuson hotels that hit a 65 percent overall score on social sites, Magnuson Worldwide will offer a 10-percent rebate on brand fees; for hotels with a 75-percent score, the rebate rises to 15 percent. “It creates a virtuous circle where better service and physical care of the property drives up scores, which leads to more money rebated, which hoteliers can invest in the property to improve guest satisfaction even more,” Magnuson said.

Social sentiment analysis can also help hotels focus on what’s truly important.

“Review content is generally the only way we’ve seen the whole social content explosion monetized for this particular industry,” Magnuson said. “It can be kind of a dogging feeling to go, ‘Oh my, what is my Twitter strategy? Do I need a social media manager?’ Hotels do better if they can reduce their focus on extraneous distractions to focus on what people think about their service so that they can do better.”

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