Bridging the Industry With Charles Wang


Consulting Services answers recent client questions about hotel revenue management’s unspoken truths

Charles Wang, IDeaS regional head of consulting services in APAC and China, discusses the things hoteliers don’t want to talk about, but need to know.

  • There have been reports of many guests cancelling and rebooking their hotel rooms to achieve better rates. How does this impact hoteliers and what can they do about it?
    Thousands of people cancel and re-book online reservations every single day. In fact, there is automated technology specifically designed to alert travellers to new price reductions. Aside from losing the monetary difference in rate, hotel rate reductions cause guests to cancel and re-book reservations, having the potential to wreak havoc on your forecast.  In addition to this, the majority of revenue technology on the market today is facing the challenge to solve this problem, which could be misleading data for hotel forecast future demand. That is potentially a bigger issue when forecast mechanism consider these “new pick-up business”, but are actually from a previous cancelled reservation. Today advanced revenue management solutions allow hotels to account for this specific guest buying behaviour. Before even making a reduction in rate, hotels can use our revenue technology to automatically account for any potential revenue lost with guests cancelling and re-booking at the lower rate. With cancellation and re-booking patterns varying by property, market, season and day-of-week, these powerful new features layer even more powerful analytical insight into the revenue solution to optimally balance price and demand.
  • Overbookings can cause stress for hotel guests and staff alike. How should hotels approach this practice and does it still have a place in a modern booking environment?
    How well a hotel’s front desk handles guest recovery is critical in any overbooking situation. One of the greatest opportunities afforded to any front desk is the ability to take a guest problem (such as being walked to another hotel) and convert it into guest loyalty. To do this, though, hoteliers need to ensure that hotel staff are properly supported and trained to accommodate walking guests. Guest recovery in ‘walking’ situations should also be supported by amenities; complimentary room upgrades or no-walk / VIP statuses for future reservations. While no one likes having to ‘walk’ a guest, hoteliers need to understand that overbooking is actually a long-term strategy that requires constant review. By analysing overbooking numbers months in advance, hotels can then compensate expected group wash by high paying transient guests. Not overbooking can result in lost revenue and missed occupancy at the property’s highest price-point where profits can be maximised. As an example of the advantages of a properly practiced overbooking strategy, consider a hotel that overbooks their base room type all year long. Assume this hotel has a cold winter, where the location of the property struggles to attract leisure travellers. However, during this period the hotel remains busy with corporate travel during the week. How can this hotel adjust their overbooking strategy to accommodate for this distinct day-of-week need? Perhaps their base room type is open for generous overbooking on the weekends (keeping their hotel as competitively priced as possible), but a conservative strategy is employed during the weekdays to encourage bookings into upgraded room types. If the new strategy helps a hotel book just five upgraded room types every weekday at a $50 upcharge, they’ve pulled in an additional $65k in annual revenue by selling the same amount of rooms.
  • Is automation set to replace the work of trained professionals in hotel operations?
    In the age of big data, automated operational systems are critical. Any revenue manager working without the support of an advanced revenue management solution will find themselves overwhelmed by the sheer volume and complexity of data. Forward-looking predictive analytics, embedded in today’s advanced revenue management systems and supported by machine learning, help hoteliers uncover emerging trends and identify more revenue opportunities. However, while machine-learning technology can aid in the organisation and analysis of vast volumes of data, and sophisticated revenue systems automatically deploy business decisions based on this type of analysis; there is still a need for human interaction. Hoteliers will still need to validate actions and alert the technology to things it cannot anticipate.

Hey, don’t leave now—the fun is just beginning. Here are more industry insights making the rounds this week:

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