The COVID pandemic meant a major blow to almost all lodging owners and operators across the board, of course, but perhaps the most shaken are members of the revenue management department who are left trying to fight for any and every piece of demand.
Crucial for hotel revenue leaders to navigate recovery will be using all the available data to make accurate pricing and packaging decisions, reaching a new set of travelers with tailored offers on their preferred channels.
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One data set that hotels have been relying on for decades has proven to be incredibly valuable throughout the pandemic, and especially as demand recovers: Market Intelligence – specifically, metrics like demand, rate, and RevPAR for competing hotels in your market, which you can use to benchmark against your own data and identify areas where you are underperforming.
Thankfully, hotels have evolved from the days of calling each competitor in their market on the phone to ask for their rates. In fact, more data on the past and future performance of the hotels in your competitive set is available today than ever before. And, while some may argue that competitor data shouldn’t impact your pricing strategy, at Atomize we believe the pandemic has reinforced the notion that it can and should be an indicator.
Hoteliers have long misunderstood the difference between “following competitor prices” and collecting data from competitors that allows revenue leaders to see a bigger picture and better analyze price elasticity against their competitors. Knowing in real time how your competitors are reacting to changes in demand will allow you to react quicker and ensure you’re not leaving any money on the table.
The Role of Market Intelligence in Real-time Pricing
Well-formed pricing decisions require revenue leaders to assess relevant data sources in real time at any given moment. Different data sources will have different impacts and weight at different times.
For example, consider a situation where you currently have your single room in the market for €100 for an arrival date one week out, currently at 20% occupancy with the same booking pace as the previous month. Without knowing the prices of your comp set as a data source – what would you do? Probably not much at this point – you would want to collect more pace information.
What if we add the information that, at €100, you are currently the cheapest in your competitive set, your competitors have sold out their rooms, and the search demand for this arrival date on OTAs is telling you that travel intent is exceptionally high? Would you then not want to raise the price?
On the flipside, consider a situation where external data sources tell you that you are the most expensive in the competitive set for the €100 single room, all competitors have single rooms left to sell, and the search demand is close to none. In this scenario, you might agree that you want to price more competitively to make sure you are getting those few reservations that consider booking (travel intent) for this arrival date.
Without broader Market Intelligence, hotels are not only running the risk of setting the wrong price at the wrong time, but also avoiding unnecessary price volatility.
Weighing Competitor Data
Above, we’ve outlined why past and future Market Intelligence is crucial for your holistic revenue strategy. Begin working this important indicator into your daily operations in the following ways:
– Look Beyond BAR.
Hotels have so many different packages and room types that the best available rate (BAR) doesn’t tell the whole story. More detailed data on competitor demand per segment is available today – use it to appropriately price your different offerings. Likewise, it’s valuable to know what room types your competitors are selling so that you can ensure you’re not underselling a category – and if you are, you have the data to show where your missed opportunities are. Technology can help.
– Monitor Changes Throughout the Day.
Revenue managers with real-time data at their fingertips have the opportunity to remain agile with their pricing strategies. Rate shopping once a day can give you valuable insights, but the market doesn’t change daily – it often changes much faster. Rate shopping on a forward-looking basis multiple times a day can help you quickly see movement within your comp set, allowing you to be nimble so that you don’t miss opportunities.
For example, if a popular event is announced in your city, more frequent rate-shopping data will give you quicker insight into how the market is reacting. Because it’s not always feasible to monitor your comp set’s rates manually, automation is key to remaining agile.
– More Data Means Better Automation.
In many ways, competitor data is real time and can be relied on more than other sets of data to ensure you’re staying in tune with the market. Through automated technology, you can react to changing competitor rates even if there’s not a person monitoring the market. A system can be relied upon to determine what changes your competitors are making and how you should react, whether that’s through raising or lowering your rates.
With that automation, your revenue manager is free to focus on more important matters, like strategy. Or, for smaller companies, it means you don’t need a revenue manager at every property because you can trust the algorithm and the data. That’s especially important today, as the industry grapples with a heightened labor shortage.
Competitor Set Data is Only One Part of the Strategy
Comp set data remains a reliable measurement, but it shouldn’t be relied upon solely as it’s not the only tool in your arsenal. For instance, what happens when one hotel in the set doesn’t know how to respond to the market and drastically drops its rate? Everyone follows suit when they look only at comp set data – and that’s not a good thing.
It’s not just about what’s happening at your property or the hotels in your comp set, but knowing what’s happening all around you, in your city and surrounding area. It’s one thing if something is only impacting you, but if there’s a demand pattern not reflective anywhere else in the comp set, then your ability to increase or decrease rate to maximize profits may not exist.
As the lodging industry continues to navigate recovery, data will be your ticket to adapting quickly and seamlessly. Ensure your teams and systems are relying on accurate data, and confidently rely on automation to free up critical resources.