Revenue Managers are facing the ongoing task of keeping up with a dynamic pricing model, which sees them needing to price their rooms based on many different factors. One thing that is directly linked to your pricing and demand are the shifting holidays and events each year. This means you need to adapt your rate strategy months in advance in order to maximise your hotels’ revenue.
This can be a dizzying task, especially considering the many events taking place throughout the year, and the ever-shifting holidays for your area and source markets.
Keeping tabs on the upcoming events in your area as well as adopting a set technique in managing your rate strategy accordingly, should give you leg up in the crowded hospitality industry.
There are two kinds of events that should be factored into your marketing and promotions strategies:
Major events. You’ll probably be aware of major events that take place in your city years in advance - events like the Superbowl, the Olympics, Detroit’s Auto Show or Monaco’s Yacht Show. This gives you ample time to prepare your pricing and distribution strategy based on the upcoming period of high demand.
Minor events are smaller, local events like concerts, business conferences, holidays or government assemblies. They also have an impact on hospitality market demand, and should have an impact on your rate strategy.
Of course, there are other events that are more difficult to leverage:
Unforeseen events. The hospitality sector is vulnerable to external events that are completely out of our control. Harsh winters, strikes by air-traffic controllers, .. These are those events that travellers didn’t plan for - something happens and they have to stay a few extra nights. For example, weather events (eg. the volcano eruption in Bali) or political incidents (eg. the political unrest in Barcelona). So if you have an inkling of which dates will be busy, start optimising your price so that you can leverage these events to fatten up your bottom line.
Staying on top of all the events for future dates helps Revenue Managers plan their inventory and rate strategy ahead of time.
But there are other factors as well that you should take into consideration for revenue optimisation. Both the guest mix and the type of hotel can affect whether room rates go up or down during events and holidays. For example, vacationers might be more price sensitive than business travellers.
Business hotel: Business hotels will likely see a demand spike during minor corporate or government meetings. This leads to an increase in single occupancy bookings, deluxe rooms, weekday bookings, and higher ADR. Corporate events can sometimes result in a gap in occupancy: An event starting mid-week will have many travellers looking for a 2 or 3-night stay, which leaves you at risk to have too much availability before and after the event. In this case your rate strategy could factor this in by applying length of stay restrictions. For example, a minimum stay of 4 nights for travellers arriving on Monday, or cheaper deals for arrivals on Sunday, to ensure you attract those longer stay guests. Local holidays will also play a role, as they lead to less business travel and may negatively impact your demand.
Leisure hotel: Minor events like concerts account for short stays, weekend getaways, etc. Local and international holidays influence leisure hotels greatly. The focus shifts to family bookings, twin rooms and different lodging formulas such as more B&B or half-board reservations. Knowing your target market segment during minor events and holiday season means you can anticipate and personalise rates. For example, during the Spanish school holidays, you could have a promotional package ready including dinner at your hotel.
As well as impacting market demand and segments, events will generate bookings via different distribution channels. Major events typically result in an increase in group bookings, so expect your group demand to increase exponentially during. You may consider limiting your transient inventory and selling more rooms direct, or adjusting the length of stay for those transient travellers. Minor events and bank holidays will likely result in an increase in transient bookings. Again, factor these in when setting your rate strategy, and optimise your revenue.
Planning ahead is key to increasing hotel revenue. Anticipate higher rates when local events are due, and keep some inventory for last-minute bookers willing to pay higher rates. Technology solutions are your friend here. Look for a tool like Rate Insight that tracks your local events and national and international holidays for you, so your Revenue Management team can adjust their rate strategy proactively, minimum 6 months out.