Low season; it’s a term no hotelier likes to hear. In times of lower demand, some hoteliers adopt the ‘busy hotel is a successful hotel’ strategy, accepting lower-rated business and relying on the in-house spend in food and beverage, spa, ancillary and more, to top up revenue. However, guests paying significantly lower room rates are also typically less likely to spend on the spa, luxury dining or experiences needed to compensate for a cheap room rate.
The longer-term ramifications of rate reductions to boost business in times of lower demand are far-reaching. Not only does this impact brand perception but it also impacts product value perceptions and future pricing scopes when the market is in recovery. The overuse of incentives to attract guests can reduce the revenue coming into a venue and turn away higher-paying customers who are attracted to a hotel for its reputation or prestige.
Given the seasonal operating environment many properties face, how should a hotel’s revenue, sales and marketing teams work together to maximise revenue through any low season? Below we identify three possible approaches; a basic, better and best practice way to approach periods of lower demand.
The Basic Approach
At a basic level, preparing for a hotel’s low season would involve analysing booking patterns over previous years for the same period to identify trends and incorporating them to the property’s demand forecast for the upcoming low season. Once any patterns amongst booking segments have been identified, incentivised hotel promotions would be designed and distributed to try and attract guests to the property. As mentioned previously though, this approach may impact overall value perceptions and is not ideal longer-term for hotels looking to capture higher-quality revenue.
The Better Approach
A better way to maximise revenue through a hotel’s low season is to move beyond applying blanket discounts, or incentives, to attract bookings. Rather, hotels should identify specific market segments that are falling behind forecast and design market segment specific promotions to address any shortfall. Monitoring and adjusting the promotion channel, spend and incentive are also critical to the success of any low season offer, and hotels should look to adjust any underperforming campaigns accordingly.
