Hotels Strategizing for Winning in Uncertain Times
Uncertainty and volatility are threatening hotel occupancy and profitability in markets all over the world right now. But, forward-thinking hotels can formulate strategies that prepare them for the effects of sudden changes on the travel industry.
Many hotels in Paris recently have turned to massive discounts, some higher than 50 percent, to fill rooms during a period of low demand. Terrorist attacks in Paris, Nice and Normandy in the past year have contributed to a huge falloff in tourism demand in the country. France’s junior minister for tourism told the London Telegraph that the occupancy rate in Paris for the second half of July was only 32 percent, compared with 77 percent in the same period a year earlier.
On the other hand, some negative events produce a positive effect on a market’s travel or tourism sector, as the “Brexit” vote in June has for the United Kingdom. Since that referendum, the value of the pound has dropped significantly against the dollar and the euro, meaning that trips to London and surrounding cities are on sale. Accordingly, flight bookings to the U.K. rose more than 4 percent in the 28 days following the vote compared with a year earlier.
No matter where your hotel is located, and no matter what circumstance is affecting your market, it’s important to have a strategy to cut through the noise. What hotels and their revenue management teams need to know in the midst of a crisis are a) whether the prevailing story about traveler demand is true, and b) if that story is relevant to the hotels in that market.
Your hotel could look in its competitor rate shops to see if the market as a whole perceives that negative news is having an effect on travelers’ demand for that area. Has the entire market concluded that the sky is falling and slashed room rates? Or are only a few properties over-reacting?
I would argue that the most valuable data can be found on hotels’ own websites.