Although hotels have practiced some of the most fundamental basics of revenue management throughout the ages, such as adjusting rates according to seasonal demand patterns and planned special events, it is generally accepted that the modern era of RM began when hotels started copying the airlines yield management techniques they developed after airline deregulation. Although the lodging industry has since evolved its RM practices, there are still some opportunities for the industry to learn from our sisters in the travel industry.
Offer Partial Credit For Cancelled Advance Deposit Or Pre-Purchase Rates.
Most hotel managers would agree that one of the hardest guest service situations is when one has to say “no” when a guest is calling to cancel a pre-paid booking at the last minute due to an emergency such as illness, weather or a death in the family. This is especially hard when there is documentable evidence such as a major winter storm that everyone knows has closed all the airports or when the caller offers to send a copy of a hospital admission, an obituary or death certificate. From what I hear, many managers end up giving in perhaps out of kindness or maybe just to avoid the negative reviews or social media postings. Also, revenue manages I know from destination resorts that charge full deposits 30 days in advance find that their policies can be a barrier, especially in situations such as this past winter when the Northeast US was experiencing one blizzard after another and potential guests were justifiably afraid they would not be able to fly out to their destination when the time came so they held off booking to the last minute. (Meanwhile, revenue managers at these resorts dropped rates at the last minute since the demand had fallen below expected pace.)
As I recall, when airlines first introduced their advance purchase rates they were likewise completely non-refundable. However most all now allow the passenger to receive a partial credit to use during a future flight. True, you might incur a $150 penalty on a $325 ticket, but it does take some of the sting out of the situation when a true emergency comes up. It also removes some of the barrier to committing in advance.
Allow Cancellation Within The First 24 Hours.
Although it was due to a new government regulation a few years back, airlines started to allow a passenger to completely cancel a future reservation within 24 hours after it was booked and receive a full refund without penalty. Similarly, destination type resorts with strict (full stay) deposit and cancellation penalties, as well as any hotels that have stringent deposit requirements for special event dates, could remove barriers to booking now by allowing guests to cancel within 24 hours of booking, so long as their dates are far enough out (say 30+ days of arrival.)
Offer Fees For Confirming Room Requests.
Although many hotels sell rooms by very specific type or view, plenty of other hotels lump a diversity of rooms into the same category. We all know that airlines charge extra for those seats at the front of the plane or in exit rows. Why not offer guests the option of paying a reasonable fee to “confirm” special requests such as for connecting rooms, low floors, specific locations (near the pool, near the front desk)?
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