As President Trump continues to be a controversial figure on the world stage, a large contingent of Americans are taking to online review sites to share their approval or air grievances. Yelp and Google ratings for Trump hotels have become a popular approach for Americans to voice their political opinions.
Businesses Are At Risk to Become Lightning Rod for Political Commentary
Trump will find his income will be affected by the quality and quantity of online reviews. This is also a reflection of a greater phenomenon where voters are either patronizing or boycotting brands associated with the President’s business interests. POTUS has even weighed in on the debate:
Thank you to Linda Bean of L.L.Bean for your great support and courage. People will support you even more now. Buy L.L.Bean. @LBPerfectMaine
— Donald J. Trump (@realDonaldTrump) January 12, 2017
Trump’s U.S. Properties Are Experiencing a Decline in Rating Since He Took Office
Donald Trump is the owner of 29 U.S. based properties, raking in an estimated $366M in annual revenue. We performed an analysis of these properties and their rating trends over the past three years to see how current events are influencing his online reviews. The distribution of reviews reflects the polarization that has become a defining characteristic of this administration. There is an increase of both one-star and five-star reviews across his properties, in the period between the election and inauguration. However, the negative reviews outpace the positive at 60-40, leading to an overall decline.
Despite going into election season this past fall with a strong 4-star average, the properties’ ratings start to decline soon after the election. This descent picks up as 2016 ends and accelerates until Trump took the oath of office in January. A more pronounced dive can be identified during the first weeks of his presidency, which spanned several executive orders and garnered a lot of publicity.
Online reviews directly affect revenue
These reviews have a serious impact on consumer behavior and ultimately, the revenue of these properties. Google ratings directly impact which search results are displayed. Lower ratings could translate into a steep opportunity cost for the majority of these properties reliant on tourism.
90% of consumers begin the buying journey by researching and reading online reviews and ratings. The content they find on these sites aids in their decision whether or not to patronize a business. In fact, a recent HBS study determined the financial impact of such reviews, and found that just a one-star increase in rating (out of five) can boost a business’s annual revenue by 5-9%.
Online Ratings Will Cost Trump $66M During His Presidency
Operating with the projected revenue impact of reviews outlined by HBS researchers, from a conservative analysis, this drop in star rating is correlated with a .5% impact on revenue now, which if it is to continue at the same rate for the duration of his presidential term, will escalate for a total 7% revenue drop by the end of his term in 2020.
With current revenue projections at around $366M a year, it is possible that the corporation stands to endure annual losses of $33M this year, alone. Some of the highest earners of the portfolio, including what the President has designated “The Winter White House” or the Mar-a-Lago club, stand to lose about 1.8M this year, should this trend continue. It’s also worth mention that these calculations are conservative and according to the most recent revenue estimations. The actual cost if these trends continue could be in excess of $100M.
Compounding the impact is the relatively high ratings enjoyed by other hospitality portfolios in the category. With luxury hotel brands, such as Four Seasons boasting a 4.4 star average and others including Marriott, Hyatt and Hilton trailing not too far behind, and all at or above the 4.0 mark, the disparity between these and the Trump properties grows even more apparent. Dipping below the 4-star mark is especially damaging, given that 92% of people will hesitate to trust a business with less than 4 stars.
Is Yelp’s Filter Mitigating Trump’s Losses?
According to Yelp, whenever a business is covered in the news to the extent that it may influence reviews written by people who haven’t actually experienced it, they flag it for “active cleanup”. Following news stories chronicling the phenomenon first for Trump Grill in New York City, and later Mar-a-Lago, some of the properties in POTUS’s portfolio are no longer accepting reviews, or are limiting those that have been submitted on or before December 15, 2016. This is clearly displayed with this popup:
Even after this message is dismissed, a notification bar at the top of the page bears a reminder that some of the reviews may be compromised by “media events”.
Both Trump Grill and Mar-a-Lago Club, who have garnered a majority of media interest currently hold an even lower, two-star rating. This comprehensive effort to monitor and “actively clean up” these compromised reviews effectively remove them from both public access as well as their impact on the property’s overall rating. This effort by Yelp to remain true to their mission of unbiased reviews will undoubtedly dampen the effect such of such efforts to voice their disapproval for the President while undermining his business interests.
However, despite Yelp’s efforts to maintain the purity of reviews, users from both sides of the political spectrum have managed to break through the suppression to leave questionable commentary on anything from month’s old scandals, to recent reports about policies.
It’s apparent that Americans are getting creative in their expression of support or resistance of the 45th President. And although it’s been historically difficult to define the effect of such trolling, the impact of these concentrated efforts are quantifiable and will undoubtedly cost POTUS.