![]() While it may seem like the only way to go, this practice is actually devastating for your property, for 3 reasons. But what if you’re undercut again? It’s very easy for a price war to start raging, where properties disproportionately slash their rates and the one with the lowest fixed costs wins, since they can go lower than everyone else. You could increase rates, but then there’s the risk of being undercut by the competition. If, on the other hand, your competitors also have also experienced a rise in unsold rooms, the situation is more delicate. If they’re all fully booked (and therefore demand is still hot) you can probably afford to raise the prices for your last few rooms. ![]() Starting by looking around and observing your competitors: what are their occupancy levels like? The first thing you need to do is stay calm and avoid acting on impulse. Protect yourself with the cancellation policyĮven if you take every reasonable precaution, sometimes you’ll still end up with a bunch of cancellations or unsold rooms. Secondly, you can reduce the overall number of cancellations and last-minute bookings, giving yourself more time to handle them and prevent your team from being overwhelmed. slowly, little by little as time goes on) you’re putting yourself in a doubly advantageous position.įirst of all, you leverage the growing demand to sell at increasingly high prices. That’s why selling rooms progressively (i.e. Better to wait, leverage the scarcity effect and cash in on the higher prices closer to arrival.Īlso consider that those who book far in advance are more likely to cancel their reservation compared to those who book closer to the day of arrival. ![]() That means you’re selling all your rooms…but at a lower-than-ideal price. The main problem is that when demand is low, you can’t put out your highest price. In reality it’s a move that’s likely to reduce profit. Selling all your property’s rooms far in advance-that is the dream for all inexperienced hotel managers. Whatever situation you find yourself in, we have some practical tips on preventing major problems and making the most out of last-minute offers. If demand is high and you happen to have spare rooms, then definitely put the prices up! But if your whole local area suffers a sweep of cancellations, say, then competitive pricing may be the best strategy. The reality is that sometimes it’s best to hike your rate up, and other times you need to slam them down. This means you haven’t managed to fill the empty rooms you’ve simply lost a little more profit from existing bookings. What happens when a property lowers its prices at the last minute, therefore, is that guests that have already booked their stay will cancel (for free!) and rebook at the lower rate. The second reason is similar to the first.Īpplications like Pruvo have similar functionality to OTAs, allowing customers to monitor the price of a property even after booking there. Hotels and B&Bs suddenly find themselves with a bunch of free rooms and need to drop prices to quickly fill them. Within a few clicks, soon before departure, they pick one and cancel the rest. Many guests take advantage of this policy and will book multiple properties so that they have a range of options to choose from, nearer the time.Īnd why wouldn’t they? After all, it doesn’t affect them! The first has to do with dreaded free cancellations offered by OTAs. In recent years, however, we’ve seen the opposite: the prices of rooms in certain locations drop just before, or during, peak season.ĭoesn’t supply and demand mean that room prices should always increase as the busiest dates approach? It is therefore normal for room prices to increase as the busiest dates of the year approach. On the other hand, voluntarily leaving rooms unsold can allow you to take advantage of the “scarcity effect”-in essence, the fact that people are willing to spend more money on desirable products with low availability-and increase profit margins.Ī good room that’s available during high season is unusual and, with the increased demand, is likely to fetch an above-average rate. With the rise of OTAs and free cancellation policies, cancellations have become more prevalent than ever. For example, you’re likely to receive at least one sudden cancellation and be left with an empty room. It’s an unfortunate reality that, sometimes, you’ll need to sell rooms quickly, just days before your peak season.
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