Hoteliers are often caught between wanting to fill up their rooms as early as possible and waiting to potentially charge more for last-minute bookings. It’s a tricky balance, trying to ensure you don’t sell out too cheaply early on, while also not holding out for higher prices that may never come.
NB: This is an article from Topline Revenue, one of our Expert Partners
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So, let’s unpack this challenge and explore strategies for finding that sweet spot.
The Early Bird vs. The Last-Minute Booker
The Case for Selling Out Early
Selling rooms early is all about locking in revenue. It’s comforting to know that your hotel will be full, allowing you to plan for staff and other operational needs with certainty. It’s the less risky route, offering peace of mind but potentially missing out on latecomers willing to pay top dollar.
Pros:
- Steady Revenue: Early bookings mean you’ve got guaranteed income.
- Easier Planning: Knowing how full your hotel will be helps with everything from staffing to amenities.
- Less Stress: There’s a certain calm that comes with having bookings in the bag.
Cons:
- Missed Opportunities: What if you sold out too cheap? Could you have charged more if you’d held out a little longer?
The Appeal of Late Bookings
Waiting for late bookings is the more adventurous approach, betting on the chance that you can charge more as the booking date gets closer. This strategy relies on the idea that scarcity and urgency can push prices up.
Pros:
- Potentially Higher Profits: You might make more per room with last-minute bookings.
- Market Responsiveness: Adjusting prices based on last-minute demand can lead to better revenue management.
Cons:
- Risk of Empty Rooms: If those last-minute bookers don’t show up, you could end up with unsold rooms.
- Operational Challenges: Last-minute bookings can make planning harder, from staffing to providing enough amenities.
Striking the Right Balance
1. Know Your Audience
Understanding your guests isn’t just about putting names to faces; it’s about diving deep into when and why they book. Do your guests typically plan their vacations months in advance, or are they more of the spur-of-the-moment type? Each group has its quirks and preferences.
For instance, business travelers might need a room at the drop of a hat, while families planning their holiday trips tend to lock in dates early to get the best deals. Recognizing these habits helps you not just in setting the right prices but also in creating special offers that hit the mark. It’s about making sure your hotel is the first thing they think of, whether they’re planning ahead or looking for a last-minute stay.
2. Use Technology to Your Advantage
Today, tech is less of a luxury and more of a must-have, especially when it comes to understanding and predicting booking trends. Revenue Management Systems (RMS) crunch the numbers and analyze the patterns to tell you when to bump up prices or when a special promo might fill those last few rooms.
