It’s the start of the season. You’ve got a healthy base of early bookings, you’ve adjusted your rates to snare in some more, and you’re settling down for an early night before a long day of revenue management in the morning.
But then, all of a sudden, you get a cancellation. And then a couple more. Before you know it, a handful of those secure early bookings have cancelled their reservation with you – and re-booked via an OTA at your recently-lowered rate.
Okay, so we may be being a little over-dramatic – but the scenario we’ve just described is one feared by an increasingly large number of hoteliers as price-drop alerts and automated re-booking sites continue to appear in the B2C travel marketplace.
The service offered by these sites is generally as follows:
- Guests sign up after booking a hotel stay, giving the company access to their booking information (this can be on the direct site or on an OTA)
- The company monitors their specific room rate (usually by automatically scraping OTAs)
- If the room rate drops, the company either (a) notifies the guest to suggest they manually cancel their room and re-book it or (b) automatically cancels the guest’s existing hotel booking and re-books it at the lower rate
- Depending on the service, this may involve channel-switching the guest from direct to OTA (or vice-versa)
So on face value, we can understand why hoteliers are concerned. When you drop a rate, it’s because you’re forecasting lower occupancy – so it would really do you no favours at all if your existing reservations all cancelled to re-book the lower rate, keeping occupancy the same but your revenue sorely depleted.
But could hoteliers benefit from resisting that initial knee-jerk reaction of fear? Do these sites have more to offer than meets the eye? And just how often are these cancellations really going to happen?
We spoke to a few key players to find out.
