Ask any General Manager or Reservations Manager when the greatest percentage of business comes in and they, by-in-large will all answer the same, ‘last minute’.

NB: This is an article by Adrienne Hanna at RightRevenue

But ask any smart Revenue Manager and they will know that whilst the very lucrative business (and lucrative only because of its momentum close to arrival date) requires an immediate reaction, the really clever decisions take place when you are able to apply strategic thinking and forecasting to dates well in advance.

Your business 6, 12 or even 18 months out is important and decisions made around rates this far in advance can make a huge impact on your bottom line. And lets face it, the decisions you make on advance business sets your ‘base’ and helps you make decisions on where and when to grow pricing.

So why should we consider business months out from date of arrival?

Well the first point is cancellations. People who book well in advance tend to cancel more often than people who book only days before arrival. Why is that? Let’s take the OTA’s as an example. have been very vocal and admitted that almost 50% of their bookings cancel. So if a booking is made by an OTA well in advance, a clever Revenue Manager is already applying a ‘probability of cancellation’ and applying that to their sales strategy.

So how do you protect yourself against these kind of cancellations?

  • Why not try an Advance Purchase Rate that is fully pre-paid? Give your customers an incentive to book and a reason to be comfortable paying up front
  • Change your terms on your OTA rates and consider asking for a deposit, full payment or extend your cancellation times
  • Send pre-stay emails that not only give information or upsell but also give a gentle reminder that the guest is actually booked!

And one important point that I feel I should reiterate from previous blogs is that OTA business should always be seen as a way for you to sell distressed inventory and should never be a large part of your sales strategy. You should only sell rooms when you need business; OTA’s should be there to help you fill rooms that otherwise would have been left empty and should not be seen as a necessity.

The second point is that peoples plans change and the longer time they have to change their plans, the more likely they are to do it.

Then what about those group blocks – weddings or tours as examples. How many hoteliers are guilty of blanket-allocating 20 rooms to a bride without even asking what her realistic requirements are? A clever Revenue Manager will ask questions of the Events Team – is the wedding local or are you projecting guests needing a room as they don’t want to travel? A clever Revenue Manager will already know the ratio of wedding guests to wedding sleepers. If your ratio is that for every 100 adult guests attending a wedding that you get 4 requiring rooms, what decision does that help you make on holding or managing allocations?

So how do you get a better understanding of cancellations or block behaviour? The easiest way and the most crucial report for any clever Revenue Manager, is a Pace Report. This will help you:

  • understand when business starts to come in
  • at which rate
  • from which segment
  • from which source
  • for which room type
  • on which rate
  • will alert you to cancellations
  • will alert you to positive spikes in business
  • will identify trends from certain sources or segments
  • will help you understand which rates sold and when
  • will help you understand if you moved your rates quickly enough to react to business
  • or perhaps did you increase too soon and stall demand

A pick-up report should be critical to all Revenue Managers and like I have said before: the best decisions are made when you have the best data at hand. And how do you obtain this data? track, track and track some more.

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