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Originally published Wednesday, November 13, 2013 at 11:05 AM

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Yelp, TripAdvisor change the game for travelers, businesses

Online reviews of hotels and restaurants are huge influence


The Orange County Register

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Cassie Piasecki navigates by the stars. Where to dine next? Where to work out when she’s traveling? She scans the Web, favoring those places with four- and five-star reviews, disregarding the rest.

Online reviews led her to Pie-Not, a four-star eatery in Costa Mesa, Calif., where she enjoyed her first Australian meat pie. She discovered Bamboo Bistro, a tiny Asian Fusion restaurant in Corona del Mar, Calif., all but hidden from traffic on Pacific Coast Highway.

“You wouldn’t really know it was there,” said Piasecki, 45, a social-media expert and Pilates instructor in Newport Beach, Calif. Her world has broadened: She has visited — and reviewed — more than 1,200 dining spots and other businesses. She talks of hidden gems in Palm Springs, Calif.; a fancy steakhouse in Boston; a gourmet cheese shop in New York City. A year ago, in Paris, she located a Halloween haunted house suitably scary for her husband, Jack.

Legions of Piaseckis are out there — modern-day magi who arrange their lives by turning to the starred ratings of products, places and services visible across cyberspace. A single galaxy, TripAdvisor.com, reported posting its 100-millionth online review in February, and has since topped 125 million. CEO Stephen Kaufer said a new review of a hotel, restaurant or tourist attraction goes onto the website literally every second. Annual revenues top $760 million.

Yelp.com occupies another horizon. The San Francisco site, founded in 2004, also posts reviews that pour in, voluntarily, from consumers eager to express their views. So far more than 42 million have been submitted, conferring starred ratings on businesses around the world. About 108 million people see the website every month, Yelp said. The firm’s ever-soaring revenues are expected to reach $228 million this year, up two-thirds from 2012.

Scores of review sites rate everyone from the butcher, the baker and the candlestick maker to lawyers, dentists and high school math teachers. Google competes directly with Yelp; the search giant feeds starred review content to its Android mobile devices, while Yelp has a deal with rival Apple. Amazon showcases ratings of books, music and videos — and of sellers who deal in those products. Rotten Tomatoes does movies. Angie’s List reviews contractors. Edmunds.com rates car brands and auto dealerships.

“It’s difficult to say how big an industry this is,” said financial analyst Sameet Sinha of the online ratings universe. Sinha, of B. Riley & Co. in San Francisco, notes that just a few top players — Yelp, Angie’s List and TripAdvisor — represent a combined market cap totaling billions of dollars. The sector has exploded virtually out of nowhere, he said. “It’s certainly become a key part of the Internet ecosystem.”

Fake and bad reviews

The power of online reviews has wrought profound, and in some cases troubling, changes to American commerce. Pick any given florist, plumber, hotel, music school, taco stand or muffler-repair shop, and chances are there are online reviews, probably on more than one website. The ratings are a sore spot for many entrepreneurs who complain they are being done in by negative reviews written by rivals and disgruntled ex-employees, with virtually no chance to remove them from the public eye.

Review sites say they are diligent about screening out fake or biased reviews because credibility is vital to drawing website traffic, but the sheer numbers of reviews to be screened is daunting, and on many sites users can easily create fictitious accounts.

“It’s not an easy problem,” said Ryan Radia, associate director of technology studies at the Competitive Enterprise Institute, a think tank in Washington, D.C. “If the writer’s talented enough, and not doing 100 reviews a day, most of the (fraudulent reviews) are hard to distinguish.”

In the end, it’s a vast guessing game as to who is posting what or why, said Trevor Pinch, a science and technology professor who studies online-reviewing behavior at Cornell University.

“Probably as many as 30 percent (of reviews seen on most websites) ... are fake reviews,” Pinch said. “No one knows for sure.”

Uncertainty has bred a climate of suspicion and acrimony among affected business owners, even as researchers and professional organizations are trying to better grasp the new landscape. A Harvard study, conducted two years ago, suggests that consumer-written reviews have a tangible impact on profits: A restaurant with a four-star average on Yelp is likely to bring in 5 to 9 percent more revenue than one with a three-star rating, scholar Michael Luca found.

Owners of eating places have become “more and more concerned” about being blindsided by damaging reviews, especially since ratings sites operate with very little oversight in urban zones where competition is intense, said Liz Garner, director of commerce and entrepreneurship for the National Restaurant Association in Washington, D.C.

Business owners need to know how to respond to bad reviews — the organization has drafted a new guidebook — while being mindful that good reviews can be a boon to those that earn them, Garner said.

“This is becoming the new word-of-mouth,” she said of online reviewing. “It’s changing the business model. It’s something, as an industry, we’re trying to adapt to.”

For many proprietors, the need to manage their online reputations amounts to an extra job — hours spent each week poring over Yelp, UrbanSpoon and other sites, and deciding what, if anything, to write in response.

“The balance of power has really swung toward the consumer,” said Mary C. Gilly, a marketing professor at the University of California-Irvine who studies consumer complaint behavior. “In the past, unhappy customers ... might tell their family and friends (about a problem). Now they’re telling hundreds of thousands of people, potentially — or even millions.”

The power of good reviews

One modest, 21-room hotel in Laguna Beach, Calif., manages to pick up guests from all over the world in part because of a 4 1/2-star rating on TripAdvisor. “We’re thrilled,” said Linda Humes, co-owner of The Tides Inn, a refurbished, half-century-old property near the coastal bluffs.

Humes said she regularly reads the online reviews of her own hotel and about eight other budget inns nearby — her competitors. She is looking for what guests like and what they don’t like, trying to fine-tune the visitor experience. At tourism meetings in town, people comment about her hotel’s ratings.

“Everybody is checking out everybody’s reviews,” she said. “But that’s good.”

One of the most competitive hotel markets in the nation exists near Disneyland. The 59-room Del Sol Inn was mired in the pack, ranked No. 81 on TripAdvisor’s hotel list for Anaheim, Calif., when manager T.J. Jones began consciously competing in the ratings game two or three years ago, Jones said.

Now the Del Sol has a four-star average and hovers around No. 20 in the rankings list, Jones said. Business is up; tourists from Japan, Australia and Germany mention that they discovered the hotel because of online reviews, Jones said.

Feedback has inspired upgraded mattresses, bedspreads and carpeting. “We stopped charging for Internet service because guests were complaining” on ratings sites, Jones said. Management upgraded the Wi-Fi signal, too. Even the free continental breakfast was overhauled, with mini-muffins and hard-boiled eggs replacing sugary Danish rolls.

“People asked for more protein choices,” Jones said. “A lot of people were saying our off-brand Cheerios tasted like cardboard, so we changed to Fruit Loops. We got great response to that.”



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