Resist the temptation to drop rate…
Stating the obvious, the impact of COVID-19 has been extreme. Hotel occupancies in many markets have plummeted from occupancies in the ’80s or ’90s to the ’10s and ’20s (if lucky). It is already worse then challenges we saw through 9/11, SARS and the Global Financial Crisis, with one of the biggest concerns and challenges being that no-one knows how long Social Distancing (in some locations) and Quarantining (in others) will go on for.
Hotel’s reactions vary from Panic to Pause… however, we suggest the best way forward is PIVOT!
What do we do when the demand is down? The first and easiest go-to is often drop rate. It may work in the short term, but this generally means, from a long-term perspective, you have now de-valued your true room value. In an event like the current (and yes, I know this event is unprecedented), dropping rate won’t work either. Your comp set will end up following you down a deep dark hole… So what to do? Here follows a list of suggested actions that may assist your property.
It is imperative in these tough times that the Reservations and Front Office teams secure every enquiry that comes
their way. Whilst usual yielding practices mean that hotels are prepared to turn business away if the customer is not prepared to pay the asking price, length of stay channel terms, in these circumstances we cannot be so picky.
Here follow a few techniques to hopefully convert as many enquiries as possible.
Hotels usually guarantee access to rooms around 2 or 3 pm in the afternoon until 10 or 11 am the following morning. Whilst there are exceptions to the rule, best practice in an ideal world is that hotels charge an early check-in or a late check-out fee outside of these hours.
Under these extreme circumstances, where most hotels would not even be close to filling, thus can afford to extend the guest’s stay in either direction.
In a similar vein, you would usually have a set up-grade fee for each of your room types. If it means you secure an extra booking, offer them a FOC upgrade.
It often costs nothing (may add some cleaning and amenity costs) but may add that little bit of extra value to the customer to help get them across the line.
In an ideal world, you have set a calculated daily rate for each of your room types, considering such factors as a business on the books, demand/pace, competitor’s pricing just to name a few. In the current climate, as explained earlier, we encourage hotels to maintain this practice even though the aim will no longer be to fill the hotel, but more so just secure all bookings possible.
In 2020, most bookers in Australia source their accommodation bookings online, however, there is still a small percentage that picks up the phone to make a booking. We believe that there will, in fact, be a higher percentage of phone inquiries during this time as they are someone more cautious in where they are booking, is it open, does it still offer food and beverage, and of course get the best deal.
They may have called around or done their research online before calling you. If they have a price in mind, from a true competitor to your hotel, under these circumstances we suggest you match the price to secure that extra booking. To make this practice effective that means management will need to empower reception and reservation staff to make the call on the spot.
During “normal” conditions hotels will “fence” certain rates through booking and cancellation rules (such as prepayment and no cancellations allowed inside certain windows or Length of Stay as an example). Whilst times are tough, right now you should open up your booking conditions.
By allowing flexibility there is a nbigger chance that the customer will click the “book now” button (“I can always cancel later”).
This practice does mean you will likely see higher cancellation rates than usual, but you will prefer more bookings even if that means a higher cancellation rate, right? You can’t lose something you never had in the first place.
Allow guests to book without a guarantee. Like the previous point made, this may mean a higher rate of no shows or cancellations. However, with your hotel likely nowhere close to filling, this risk is worth taking.
Now is not the time to “Channel Manage”.
Be smart and work each channel to their potential. We ALWAYS recommend you practice rate parity across your
public channels, but this is more important than ever under these conditions. Make sure that specific promotions on certain channels are matched on other OTA’s and channels, including your own.
OTA’s have a huge reach and much bigger marketing budgets than you will ever have. They appear first on pretty much any Google search you can think of and have huge databases they market to.
Whilst their traditional marketing and promotional activity has been minimalistic to date, rest assured they will “pounce” when the time is right. Take advantage of this marketing resource. Look at the commission as a marketing cost. The beauty is you only pay when you have success.
Most OTA’s these days have their
own Loyalty programs. They all work slightly differently but often include a discount and or higher commission levels.
This will ensure you are being shown to their closed user group of members in many forms and with typically a more attractive offer. Normally we advise on a case by case, client by client basis, whether it is necessary to participate or not. In this case, we are saying go for it!
These programs may very well compete with your own program, should you be in one. However, under these extreme circumstances, we suggest you forego the long-term implications… your competitors likely will anyway…
Some OTA’s offer mobile-only promotions, with more and more bookers using a mobile-only platform these days.
In usual trading conditions, we would not suggest participating as a rule as this would break rate parity. However this may just be the time to try it, should it turn on another room night (or more).
Check your content, offers and other factors that impact on your ranking on each OTA to ensure maximum positioning. Most OTA extranets have indicators and analysis tools to assist with these.
Some OTA’s allow you to artificially boost your ranking through accelerators (increase commission) and advertising (e.g. Expedia Travelads). Be careful about overdoing this. If your property is already ranking well or if you are in a small market it may not pay off to pay extra for the ranking boost. Likewise, if you pay for one, chances are there is no point in participating in the other as well as the two products usually override each other.
Many hotels tend to rely on the biggest OTA’s. We’ve seen plenty only listing on one.
Whilst Pareto’s 80/20 rule suggests you should focus on the big players only, in the current climate, support the smaller distribution partners (ensure you are on top of your credit checks).
There is additional setup work however most listings do not cost anything additional. Now is the time you will likely have the extra time to do the setup work. Check with your Channel Manager that the OTA in question is easy/possible to connect to first.
Now is the time to look beyond the true and tested. Wholesale, GDS, Airbnb, Group-buying sites (such as Groupon).
There are plenty of options out there. Some may suit and others won’t, but it’s the perfect time to explore and look “outside the box”.
Is there a channel/market you have
never pursued?
Maybe you are a heavily corporate business dominated hotel and now could be a good time to explore some Leisure channels such as; Traditional Wholesale, Online Dynamic Wholesale, Airbnb, Group buying.
Or maybe you are more Leisure focused and have never considered the GDS as a platform that suits your property. Whilst leaning heavily towards corporate business, the GDS can also generate additional leisure business depending on your product and location. It’s an unknown channel for many, but can be a “pot of gold” if you get it right.
Ensure as many hurdles as possible are removed for your customers.
With the large majority of bookers conducting their research online, your ability to be found online, be appealing and with consistent messaging on all platforms is critical.
Three of the most powerful points of presence are Google, Tripadvisor and your state or national tourism organization such as Destination NSW or ATDW.
Review these from the eyes of the booker and look for having your best, most up to date Photography and Videography. A strong introductory message about why choose your property along with 3-4 key unique selling points. Consistency of information including, property name, room names, descriptions, address and phone numbers.
Download the full checklist from our online resources.
Hotel Strategy Co. is a results-driven performance agency helping Hoteliers maximise the revenue and profits in their accommodation business.
We have a dedicated team of Revenue Managers, Distribution Managers, Number Crunchers, Online Strategists, Digital Marketers, Sales Managers and Performance Optimisation Specialists, waiting to work hard for you.
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A: 62 Bundawarrah Rd. Temora, NSW 2666, Australia
