Correlation between hotel pricing and overall social mentions in Menorca, Ibiza and Madrid
As many of you already know, during the past few weeks, we’ve been exploring the correlation that exists between some of our indexes using social data, and other sources of data such as, temperature records. We have found interesting patterns emerging that helped us have a better understanding of traveler perceptions and expectations.
This time, we are presenting you something very interesting to us, which is the correlation between the volume of tourism related mentions and hotel prices in three different Spanish destinations: Menorca, Ibiza and Madrid.
To begin with, we collected the average lowest price of double rooms in all the hotels in these destinations from the first of April till the end of July (which have been booked a month in advance).
Also, we gathered all social mentions originating from these three destinations in the same time period between April and July and applied our Tourism-related algorithm which filters out any data point not related to tourism.
As you can see, there is a very clear pattern in Menorca where hotels prices and the volume of mentions grows steadily together. If you take a closer look you will see that the correlation is much stronger for three and four-star hotels.
A very similar pattern can be found in Ibiza, although in this case, the volume of mentions grow faster than in Menorca. What makes this specially interesting is the fact that in Ibiza, three and four-star hotels prices are not as sensitive as those of five-star hotels. This is exactly the opposite to Menorca, and again, it is telling us something about the positioning of each island and the particular travel dynamics that affect both of them.
And finally, in the case of Madrid, we find how the volume of mentions decrease along with hotels prices. Here the correlation is a little bit lower but still, significant enough. Here again, as in Ibiza, five-star hotel prices are the ones being more sensitive to shifts in demand.
For as long as we know, this is the first time that a strong correlation is found between transactional and social data in the travel industry, and we are excited to share this finding with you. Some of the key takeaways for us here are that, crossing these two sources of data, it is way easier to have a better understanding of the touristic dynamics affecting a particular destination. In this case, we are able to measure how sensitive hotel prices are to seasonality. It should be noted that the seasonality does not affect similar destinations such as Menorca and Ibiza equally, and Madrid also illustrates this point.
The fact that pricing in different hotel categories has a very different behavior depending on the destination, and being able to measure this behavior, is key in order to understand how our destination is positioned and the economic impact that seasonality has in it.
We hope you find these insights as interesting and exciting as we do. This will be our last report until September, but it’s just a small taste of what’s yet to come. Stay tuned!