During the last two months, those of us working in the hospitality sector have already or will experience the stages in the grieving cycle. In one way or another, we are undoubtedly undergoing shock, denial, anger, bargaining, testing, and acceptance. This reaction is unavoidable under such unprecedented circumstances. Those who are first to embrace the “acceptance” stage of this new reality will no doubt be in the optimal position during the recovery process.
Following are some recommendations in order quickly adapt your revenue management tactics to the present environment in the hospitality industry:
Tune up your RMS. Watch and adjust your RMS data at a property level to ensure that the new demand and cancellation trends are in tune with forecast. While most of the RMS take competitive actions into account in their yielding approach, their systems cannot identify every unexpected factor and most of all, the great instability in demand. During these unprecedented times, revenue-management tools will be highly dependent upon human intervention. System learning will be fast if we use the correct input to influence, rather than override. Therefore, it is critical for Revenue leaders to evaluate demand, transient cancellation and group forecasts closely, especially on days where demand exceeds the “new normal” reduced capacity. Revenue experts will need to continue monitoring demand in their respective markets and adjust frequently.
Rate positioning. Avoid the urge to reduce rates as a response to the current market conditions. As revenue managers, we need to continuously educate others on the implications of deep rate reductions and the risks of such an approach. As shown from previous recessions, hotels that execute purposeful rate reductions are impacted by deeper profit losses and a longer recovery period. Nowadays, most hotels in our competitive sets employ top of the line RMS that shop competitive rates frequently; any proactive reductions in rate will most likely be matched rapidly, resulting in nominal share gains and weak profitability.
Promotions. Do not endorse products outside your normal revenue strategies, such as steep limited time discounts, exclusivity contracts or pre-buy allotments, as they negatively influence long-term consumer behavior and generally will not generate any additional demand under periods of limited demand.
Develop new deposit/payment policies. Non-refundable rates may not be attractive during the next few months. Therefore, hotels will want to adapt and refresh cancellation policies to offer more flexibility during these challenging times.
Update images. Hotels should attempt to reflect images showing efforts across the hotel to maintain higher levels of sanitation, and convey to potential guests that it is safe to consider your property. This same message should be displayed across OTAs and brand.com sites in order to consistently highlight a sense of safety to everyone, those considering making a reservation as well as those with already confirmed bookings.
As revenue optimists, we feel that those who are focusing on the future, taking deliberate actions, and being strategic in preparation for when the hospitality industry returns will succeed by enabling a faster recovery, improving their positioning and exceeding improved expectations compared to those during pre-pandemic days. Remember that all experts were once beginners, so it is never too soon to start. Above all else, be safe as our communities begin to reopen!