Will social media impact management contracts?

Professional services network, PricewaterhouseCoopers (PwC) has suggested in its latest report that within five years, owners and operators may incorporate online reviews into formal contractual measures.

The report, Accommodating Growth, was released earlier this month, providing a forecast for hotel performance in the Middle East.

It stated: “With so much of a hotel’s reputation now determined online, management contracts need to find a way to reward – or sanction – operators’ performance in this area too”.

Alison Grinnell, director- hospitality and leisure, PwC told Hotelier: “Should ratings be built into hotel management agreements? Online ratings are never an exact science, you can’t make everyone happy but the ratings are there and people do look at them.”

PwC partner Philip Shepherd added: “Is there a direct economic impact by having a low rating? With these things increasingly important, operators have to track, measure and respond to the ratings because the volume is enormous and there are tools that can help you do that.

“I think operators do it but probably inconsistently and without understanding fully how to do it.”

When questioned on the topic during an interview with Hotelier Middle East at Arabian Hotel Investment Conference earlier this month, Marriott International CEO Arne Sorenson said: “I think it’s probably a fair point for them to raise because I think we don’t really know is the true answer.

“People already look at our performance on social media compared to other operators and we think we’re doing really well.

“But that in a sense is an input into what the real results worth measuring are, and those are; ‘how do our hotels perform – top line and bottom line compared to other hotels in the same market?’ That’s the best way and we do really well on that.

“That will be impacted by social media, the rewards programme, the service in the hotel – all of these things.”

The report added that the likelihood is that owners will start to take a more formal approach to online reviews when considering management contracts in the future.

“It may be some time before operators and owners are confident enough to incorporate [reviews] into formal contractual measures, but we would not be surprised to see that emerge in the next five years,” it stated.