Black Friday and Cyber Monday have been established as top selling days in the hotel industry, too. However, there are risks involved: those who offer discounts on room rates without careful consideration risk damaging their price image in the long term and may end up operating at a loss.
NB: This is an article from Hotellistat, one of our Expert Partners
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The key question is: how can you strategically leverage the peak promotional period without sacrificing profit?
The big risk: RevPAR cannibalization
A simple discount on the base rate may increase occupancy in the short term, but can undermine the average daily rate (ADR) in the long term. Guests get used to low prices and strategically align their booking behavior with such predictable discount campaigns. If promotions are offered for periods of high occupancy, potentially high-margin bookings may be blocked at rock-bottom prices. Even more drastic: dumping prices lead to destabilization of the entire market, as competitors are drawn into an unnecessary price war and consumers’ perception of prices permanently suffers. The solution is to control demand strategically.
1. Strategy: Timing deals based on the right data (the AI solution)
The key is to only place deals where there are existing gaps in the forecast. This requires accurate forecasting, which often exceeds manual calculations.
The AI advantage: Modern RMS systems such as Hotellistat use real-time data and historical patterns to identify exactly which days of the week, weeks, or seasons (off-peak periods) generate low revenue.
Campaign goal: The Black Friday promotion is specifically timed to coincide with these low periods, thereby increasing occupancy where it is really needed. Guests benefit, but the hotel only fills the predicted gaps.
2. Strategy: Increase value: Manage length of stay (LOS)
Instead of lowering the price, the value of the stay should be increased. Controlling length of stay (LOS) is a common and effective tool in revenue management. Black Friday deals are great for using this technique to extend length of stay and increase profitability per stay: Offer promotions that require a minimum length of stay (LOS) which is longer than the statistical length of stay of your guests. This reduces transaction costs per stay and stabilizes occupancy over a longer period of time Important: Only apply LOS rules specifically to weak dates so as to maintain flexibility for high-demand days. Example: “Book 3 nights, pay for 2” – in this case, the rate is not reduced, but an additional product (the third night) is used as an incentive.
