Chess is a well-known game of analysis. When playing for the first time, one often lacks the knowledge to think strategically. Over time, however, one begins to weigh possible outcomes for every decision, even when it’s their opponents turn. The ability to understand and analyze all potential scenarios and outcomes will lead to more wins.
Similarly, revenue managers for hotels and resorts play a perpetual game of chess, where every move they make within their own market has an outcome. Will a revenue manager grab their market’s king, the most valuable business? Or will they be left protecting pawns, the unnecessary discounts leaving your hotel or resort vulnerable to losing?
Some potential scenarios hotel and resort revenue managers may experience when it comes to winning and losing:
- Copying competitor moves may not always mean victory
- Will we lose our fair share of business if we don’t drop rates?
- When competitors begin dropping rates, it generates a desire, in fear, to drop rates to maintain ‘fair share’. This information can be helpful, but could result in negatively impacting ADR & RevPAR when it doesn’t have to. Would you drop rates five days to arrival if you knew the average market occupancy is at 80%, while you’re at 90%?
- Check Rate before you Checkmate
- Are we quoting rates that are too high or too low?
- When reviewing rates from previous years, it’s generally smart to start with what you already know. However, market deviations do occur. Revenue managers often know when they need to accept discounts to drive occupancy, but recognizing price sensitive scenarios to drive rates can be a challenge.
- A good sacrifice or a bad sacrifice?
- What sort of discount do I offer to my loyalty members?
- Enforcing an environment where guests identify themselves as a member does provide a sense of loyalty to take advantage of discounts. However, this could shrink your most profitable business segments due to discounting your highest rated business that isn’t price sensitive.
- Will the Queen’s Gambit pay off in the end?
- If we take group business outside of our booking window, will we be unavailable for more profitable opportunities?
- Group business will forever be a win/lose scenario in a market without understanding accurate outcomes. Revenue managers who do not fully understand their demand forecast, by market segment, will be at a disadvantage when considering group business. Have you ever looked at your STR report and wondered the ‘what-if’s’ of group business decisions?
Uncertainties like these could lead revenue managers to make less confident decisions. Have you ever faced a situation where there is a high volume of lower-rated business on the books when your market becomes compressed? You aren’t alone! A novice revenue manager can make the same mistakes as a novice chess player by making aggressive moves too early.
When it comes to developing and implementing hotel and resort pricing strategies, producing an accurate forecast is the best way to yield greater results. The ability to predict accurate outcomes allows revenue managers to think strategically and be able to say “checkmate” when their STR report arrives.
In chess, players succeed by making a series of the right moves at the right time. The same goes for revenue managers of hotels, who can make key pricing decisions and win big by knowing the best business mix to book based on their forecasts.
Revenue management solutions help revenue managers make the most confident and profitable decisions by employing the most advanced predictive analytics available on the market. With the help of such powerful tools, what’s to stop you from taking your market’s King?