News for the Hospitality Executive
October 2010 - In the past five years – and even more so in the past two years – the hotel booking window has been shrinking rapidly.
Unlike in the past, where travellers would book their hotel rooms months in advance, today’s consumers are instead choosing to wait to the very last minute to book – sometimes even as late as when they are standing on the pavement outside of a property. In fact, Priceline’s research shows that 58% of customers with mobile devices were within 20 miles of their hotel when they made the booking — and 35% were within just a mile.
The Internet, or more specifically the availability of portable wireless devices, has completely changed the way consumers shop for hotel rooms. So has the recent economic recession. In the past, travellers typically booked stays in advanced because it was common for prices to go up as your travel date got closer. In the current economic climate, travellers don’t always have the luxury to be able to plan so far in advance because their financial situation could change at any time. Because of this – and because many people have cut back on travel altogether in an effort to spend less, many hotels are enticing travellers with last-minute deals.
As well, with the ability to go online even while on the go - with WiFi access in most public areas, including the airport and in-flight, and access to the Internet on smartphones - consumers can not only spend more time browsing online for the best deal possible, they also don’t feel as pressured to book such a long time in advance.
Because of the changes in the booking window, the entire revenue management process must adapt for continued success. With today’s shrinking booking window and the fast-paced nature of the industry ushered in by the growth of the online channel, a hotel’s success depends on staying tech savvy, particularly when it comes to revenue management. The fact of the matter is, that even if a hotel had revenue management staff available 24/7, they would still be unable to update rates as quickly—or as accurately—as an automated revenue management system can.
With the use of an automated revenue system, hotel revenue managers are able to manage pricing, as well as their entire inventory, in one place. These revenue management systems are able to evaluate information, adjust inventory, and place the property in the ideal OTA page positioning to ensure the highest number of bookings at the highest rate possible. They can also update each online distribution channel and make real-time pricing changes automatically, leaving the revenue manager to oversee the process and work on developing the RM strategy that humans (and their strategic brains) are best at.
With the sophisticated technology of automated revenue management systems, optimal pricing can be determined quickly using traditional hotel and financial strategies. It allows hoteliers to keep their prices competitive and maximize bookings, while making their revenue managers more effective, and as a result, their hotel more profitable overall.
(This article has been contributed by Jean Francois Mourier, CEO of RevPar Guru)
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