July 2016, by Lizzy Stallard, Head of Marketing & New Business
“The whole notion of stars, even pre social media, eight or ten years ago, was obsolete, because a brand matters more than a star rating.”
These are the words of then CEO of Starwood Hotels and Resorts Worldwide, Frits van Paasschen in an interview back in 2014. His point raises an important question around the role of the traditional hotel classification system, which is largely based on functional amenities, and omits guest experiences. This combined with the changing way in which consumers research and buy travel experiences, suggests that now is the time to look at the entire classification system.
The World Tourism Organisation (UNWTO) has this on their agenda. A report published in 2014 outlines their investigations around ways to better integrate traditional hotel classifications (star ratings) and online guest reviews for greater relevance. Several highlights from the report are particularly interesting for brands in this space:
- Over 50% of people will not select a hotel if there are no reviews
- Consumers use guest reviews to make their final selection from a pre-determined shortlist (it is rarely the starting point in a hotel or holiday search)
- 3 or 4 star hotels tend to get a greater number of positive reviews, indicating that it may be harder to exceed expectations for brands at the luxury end of the market
- On average, a 1% gain in guest review scores translates to a 1% gain in RevPAR (using online data from ReviewPro and hotel performance data from Smith Travel Research)
- Officially classified hotels command significant price premiums over unclassified hotels
Beyond stars and reviews – the very role of hotels as more than just a destination for holiday makers and business travellers questions the need for a classification system altogether. Hip boutique hotels like Ace, Firmdale and W transcend this tick-box exercise and command a price premium thanks to their well-defined concepts that are tuned-in with the zeitgeist. Their desirability is validated not by the amount of stars they can claim, but by the very fact that they’re constantly buzzing with a mix of guests and locals who see them as the place to be.
So whilst traditional classification systems might help in getting the basics right, the real deal is in owning a strong concept and delivering it single-mindedly and uncompromisingly. Regardless of how many stars are on the door.