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1 The results of a PwC study suggest tnat online revievvs presenränortursitre imrrove hörgrefärlefts- OFFICIAL FIVE-STAR HOTELS IN SRI LANKA CITY HOTELS BEACH HOTELS CENTRAL HOTELS Cinnamon Grand Cinnamon Lakeside Galadari Hilton Taj Samudra The Kingsbury Eden Resort & Spa Heritance Ahungalla Jetwing Blue The Blue Water Vivanta by Taj (Bentota) Cinnamon Lodge Habarana Earl's Regency Heritance Kandalama Mahaweli Reach Hotel Ausschnitt Seite: 1/10

2 Five-star hotels in Sri Lanka face stronger national and international competition than ever before. To compete effectively in this environment, it is vital to focus on service quality and guest satisfaction. Quality service is all about managing guest expectations and delivering the right amenities. One bad or disappointing experience during a holiday can influence all other perceptions. Likewise, the delivery of quality service leads to customer loyalty, repeat purchase behaviour and positive word of mouth. In this digital age, guests share their experiences with a wide audience on websites such as TripAdvisor or Expedia. A hotel's online reputation facilitates an analysis of how well it performs in relation to guest expectations. A study by the Cornell School of Hotel Administration* shows that a one percent improvement in a hotel's online reputation increased the price (ADR) by up to 0.89 percent, occupancy by up to 0.54 percent, and revenue per available room (RevPAR) by up to 1.42 percent. These are significant increases and more reason for hotels to respond to comments and improve operations to enhance their online reputations. PwC Sri Lanka and the Lodging & Tourism team from PwC Switzerland analysed the performance of five-star hotels in Sri Lanka in relation to their international competition, based on the hotels' ReviewPro Global Review IndexTM (GRI) ratings. * eck'/1-e searc hichrip u bs/reports/ abstract html GRI comprises all the guest ratings a hotel has received across 140 online review and booking sites. ReviewPro department indexes were also used to analyse the performance of hotels in the context of service, cleanliness, location, value and rooms. All data was collected on 6 January, so the information represents the GRI and department index scores on that day. For the purpose of this study, the 15 official five-star hotels in Sri Lanka were grouped into three categories viz. city hotels, beach hotels and central hotels. The review scores were analysed and compared between the categories and the national average. The graph shows the development of average GRI ratings for the different categories between 5 January 2013 and 5 January The scores fluctuate throughout this term, which could be due to several reasons. Changing customer segments may have different expectations. They may, therefore, rate a hotel experience differently. The other reason could be inconsistent service delivery, which means that not all guests are equally satisfied with their experience. ONLINE REPUTATIONS On the day the data was collected, the average GRI of all five-star hotels in Sri Lanka was 83.3 (out of a maximum 100). The averages within the individual categories indicate that the beach hotels have the highest GRI (85.7), followed by hotels in the central regions of the country (84.6). The city hotels have the lowest average CRI One reason for the City hotels' relatively low score may be the minimum rate, which raises guest expectations. Service, cleanliness, location, value and quality of rooms are essential elements of any hotel experience. Therefore, it is interesting to compare the five-star hotels in Sri Lanka along these lines. Beach hotels score the highest for service, cleanliness and value. The City hotels receive the best ratings for location, whilst hotels in the central regions do best for their rooms. REVIEWS BY LANGUAGE Online reviews are authored in various languages, and this enables an analysis of which languages are used most often and how positive or negative the comments are. The percentage of positive, neutral and negative comments provides an indication of how well customer expectations were met. The distribution of these comments varies greatly between languages. English is by far the most frequent language of review (4,760). This could be attributed to the fact that most review sites are offered in this language and because guests want to share their experience in a language with a wide Ausschnitt Seite: 2/10

3 readership. Arabic and German are the second most common languages, but they account for only 300 and 274 reviews respectively. In total, English accounts for four times the volume of reviews of the aggregate of the other nine languages. Interestingly, guests who review experiences in Arabic post the lowest percentage of positive comments and the highest percentage of negative comments. Although this represents a relatively small sample, it could suggest that Arabicspeaking guests have higher expectations and might be less satisfied with their hotel experience. REVIEWS BY SOURCE In addition to the languages of review, it is also useful to compare the most popular review sites. As is the case with languages, there is also a clear leader amongst the review portals. Out of the 140 sites analysed by ReviewPro, TripAdvisor is the most frequently used (3,517 reviews) to rate five-star hotels in Sri Lanka. Booking.com (1,525) and Google (239) round out the top three sites. lt is important for hotels to proactively monitor the top sites, to ensure that they can respond to posted comments. As with the languages of review, the percentage of positive comments varies greatly between sources. Booking.com is the source with the least positive and most negative comments. lt is important for hotels to proactively monitor the top sites for their properties, to ensure that they can respond promptly to comments that are posted. INTERNATIONAL BENCHMARKS To benchmark the results on Sri Lanka against international competition, some cities and resort destinations were selected for comparison with Sri Lanka. Within these competitive destinations, five-star hotels in Sri Lanka, on average, are rated lower than their regional competitors. The top destinations are the Maldives and Bangkok, with an average GRI of 92.7 and 90.5 respectively. This is significantly higher than the averages for Colombo City hotels (80.7), Sri Lanka beach hotels (85.7) and hotels located in the central regions of the island (84.6). The top performing hotels in each competitive destination also have higher ratings than their Sri Lankan counterparts. Ausschnitt Seite: 3/10

4 MEDIA SERVICES PHOTOFILE (CINNAMON LODGE HABARANA) Ausschnitt Seite: 4/10

5 MEDIA SERVICES PHOTOFILE (VIVANTA BY TA» oier lereeit T_Inrn 17-1 nrrn glen nrninggrr171" 171 rimmuntem rumewirs;27, MEDIA SERVICES PHOTOFILE (CINNAMON GRAND) Ausschnitt Seite: 5/10

6 INTERNATIONAL FIVE-STAR HOTELS I BENCHMARK DESTINATIONS DESTINATION GRI HOTEL GRI 1 Maldives Gili Lankanfushi Maldives Bangkok The Forest by Wangz (Singapore) Singapore Four Seasons Resort Koh Samui Koh Samui The Leela Palace New Delhi Phuket Mandarin Oriental (Bangkok) New Delhi Trisara Phuket ; 7 Sri Lanka beach hotels Cinnamon Lodge Habarana Sri Lanka central hotels Vivanta by Taj (Bentota) Colombo City hotels Cinnamon Grand Colombo 85.2 DEVELOPMENT OF THE G LOBAL REVIEW INDEXTM (GRI) SCORES FOR FIVE-STAR HOTELS IN SRI LANKA (2013) 90 (GLOBAL REVIEW INDEX') 75 - CITY HOTELS BEACH HOTELS CENTRAL HOTELS ALL HOTELS 5 JAN MAR MAX JUL SEP NOV 'JAN 2014 PERFORMANCE INDICATORS I FIVE-STAR HOTELS IN SRI LANKA TOTAL CITY HOTELS BEACH HOTELS CENTRAL HOTELS G R I Service Cleanliness Location Value Rooms > Ausschnitt Seite: 6/10

7 MOST FREQUENT SOURCES FOR REVIEW TOTAL REVIEWS POSITIVE (%) NEUTRAL (%) NEGATIVE (%) ALL SOURCES 6, TripAdvisor 3, i 2 Booking.com 1, Google > 4 Expedia Hotels.com HolidayCheck TopHotels travel > Ausschnitt Seite: 7/10

8 MOST FREQUENT LANGUAGES OF REVIEW (THE TOP 20) TOTAL REVIEWS POSITIVE (%) NEUTRAL (%) NEGATIVE (%) ALL LANG UAG ES 6, English 4, Arabic German "re 4 French Russian Japanese wie 7 Italian Chinese Dutch Spanish With a GRI of 98, the Gili Lankanfushi in the Maldives tops the list. The top City hotel is the Forest by Wangz, in Singapore, with a score of Within the rating of the best five-star hotels in Sri Lanka, Cinnamon Lodge Habarana - in the central region - receives the highest rating (89.1 GRI). The Sri Lanka beach hotel Vivanta by Taj (Bentota) comes in a close second with a GRI of And the Cinnamon Grand is the leading city hotel with a GRI of All these scores are significantly below those of their regional competitors, which places the Sri Lankan hotels at a disadvantage when guests use online ratings to make decisions. Once again, the competitive city hotels in the region are at an advantage, because they are not bound by minimum rates and can adjust prices to match guest expectations. GAINING FROM ONLINE REVIEWS There are two ways in which hotels can benefit from reviews and utilise them to improve their relationships with customers. To understand the impact of reviews better, consider the Review Response Cycle. lt starts and ends with guest expectations, because they determine how visitors will evaluate their hotel experience. PRE-VISIT GUEST EXPECTATIONS Before booking, the guest compares hotels based on personal criteria. This criteria may be related to pricing, star ratings, personal experience or the experience of friends and family, as well as the hotel's online reputation. All the information that a guest collects about a hotel will influence his or her expectations of the hotel experience. Ultimately, guests will book the hotel that they expect will fulfil their needs best, within their budget for the trip. Naturally, the higher the price or star rating, the greater the expectations will be. SERVICE DELIVERY During their stay, guests assess the quality of the hotel experience based on both physical and service aspects. Were the employees friendly when they first greeted the guest? Was the check-in quick and smooth? Was the room tidy on arrival? And how was the food? For all these factors, guest assessments will always be in relation to their initial expectations. If their expectations are not met, a gap can open up and lead to disappointment. If, on the other hand, guest expectations are met or even exceeded, they will be delighted. Either way, they are likely to want to share their experience with other travellers. ONLINE GUEST REVIEWS The reviews guests share with friends or post on review platforms will be in relation to how well Ausschnitt Seite: 8/10

9 their expectations were met by the hotel. The review comments often provide valuable insights into what was good and what went wrong during their stay. This is precious market intelligence. In order to take advantage of this information, hotels need to know how to respond. HOTEL RESPONSES COUNT A prompt response to negative online reviews can mitigate the effect on the booking decisions of prospective guests. lt shows the guest that the hotel is listening to these channels and has an interest to improve. Hotel responses often thank the guest for posting feedback and then apologise for their bad experience. This is already an important first step! However, the more difficult task is to then conduct an internal review of what went wrong and find ways to ensure it does not happen again. Hotels should analyse their systems and processes to determine the source of the problem, and work on resolving it. If negative comments relate to physical aspects of the hotel ongoing renovations, for example it may be necessary to inform guests before they arrive, in order to manage their expectations. Responding to complaints about service or staff may involve adjustments to the hotel's standards or standard operating procedures, so that they are in line with guest expectations. The goal should be to deliver quality service, in line with expectations, in months and years ahead. If a hotel can implement systems to analyse guest comments, respond quickly and take the necessary action to ensure that service improves over time, it will be in a stronger position to compete in a world where online reputations influence purchase behaviour and lead to improved financial performance. RESPONSE CYCLE GUEST EXPECTATIONS HOTEL RESPONSE AND OPERATIONAL CHANGES Ausschnitt Seite: 9/10

10 ABOUT PwC PwC helps organisations and individuals create the value they're looking for. We're a network of firms in 158 countries, with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. PwC Switzerland's Lodging & Tourism Clients Group is a dedicated specialist lodging and tourism advisory team that helps businesses get ahead in a challenging tourism environment. We pursue an integrated consulting approach along services, hospitality asset services and hospitality operations. For further insights in relation to this study or tourism advisory services (including stakeholder experience management, strategic planning, digital transformation and distribution alignment, operational effectiveness audits, yield management optimisation and Operator selection and management contract advisory), contact Channa Manoharan or Dr. David Ermen. the tourism value chain, servicing the entire spectrum of tourism stakeholders from destinations, hotel owners and operators, to tourism infrastructure providers and local, regional, national and international government entities. Based on this approach, we are able to provide our clients with a holistic view of their environment and are able to leverage our industry contacts to our clients' advantage. The group serves over 120 global clients in tourism destination services, hospitality structuring Channa Manoharan Advisory Leader PwC Sri Lanka channa.manoharan@lk.pwc.com Or Dr. David Ermen Manager, Lodging & Tourism Clients Group PwC Switzerland david.ermen@ch.pwc.com Ausschnitt Seite: 10/10