Rachel Grier's insights on occupany and revenues during major events
Significant sporting, religious or entertainment events draw large numbers of potential hotel guests to cities in India today. The surge in guest numbers for an event presents local hoteliers with the opportunity to increase revenues and introduce their hotel to a new group of loyal of customers.
Catering to large-scale events is not without risk. Current, loyal customers can be displaced, and some properties may find themselves struggling to fill last-minute availability due to cancellations and unforecasted washing of group blocks.
Given the opportunities and risks present, how should hoteliers approach a major event? Here are five tips that Rachel Grier, Area MD, Asia Pacific for IDeaS, shares to prepare your hotel for increased business during special events:
Carefully manage your pricing strategies
The pricing strategies in the lead-up to major events, like the Ganesh Chaturthi festival that attracts large numbers of guests into Mumbai, need to be carefully managed with the focus placed on maximising revenue per available room, in line with the forecast. While an expected increase in demand on significant event days will allow rates to be driven up accordingly, this will not be the case on less significant days. During busy days associated with the actual Ganesh Chaturthi street parade, a hotel can look to close out all lower rated segments if required, as well as ensuring room type premiums are realised, limiting free upgrades and to make the most of any upselling opportunities. However, on lower demand days outside of those directly linked to the parade, these restrictions should be relaxed so as not to discourage potential customers from booking with the hotel. It is also an opportunity to deploy length of stay pricing to drive occupancy on shoulder nights, thus achieving the optimal revenue for the entire period, not just the peak days.
Prepare for the last-minute bookings
Historical hotel booking data indicates that the greatest lengths of stays are booked over 30 days out from the event. However, what makes significant sporting events, like IPL, unique is that a hotel may not know the where guests will be coming from until just before the actual event. In the case of the IPL cricket finals, most travelling fans aren’t going to pre-pay for rooms and buy airline tickets until they are sure their team is going to be there. For this reason, a hotel should prepare for a demand spike the day of the semi-finals when the two final teams are determined.
For travelling fans, the longer length-of-stay demand for these transient travellers is booked during this demand spike. The closer you get to arrival, the length of stay decreases, but these shorter stay guests are willing to pay a premium. The trick is to capture the best length-of-stay reservations quickly, even if it means sacrificing rates a little.
Get your overbooking strategies right
Significant music events, like Ed Sheeran’s 2017 tour stop in Mumbai, deliver large numbers of guests. While a large portion of these guests will research and book rooms in advance of their favorite music act visiting a city, there will also be a considerable number of last minute bookings. Therefore, hoteliers must ensure that they have the appropriate overbooking strategies in place. While hoteliers traditionally use overbooking strategies to counteract last-minute cancellations, large-scale music events deliver substantial numbers of potential new hotel guests and generally fewer cancellations from tighter booking terms and conditions. Overbookings offer both risk and reward and should be carefully managed to balance the risk of being forced to send a potential new guest to a partner or competing hotel. This may result in either a disgruntled potential ongoing hotel guest, because they didn’t get to stay in the hotel they booked, or worse, a guest who enjoyed their stay in another hotel and may become a repeat customer of your competitor.
Place a premium on your event spaces
For hotels with event space, it is wise to set premium food and beverage minimums for any groups wishing to block space. For events with a large corporate audience, it’s an opportunity for companies to impress clients, so it is not uncommon for hotels and restaurants to be nearly completely bought out by a company, and these groups are usually willing to pay top dollar for the right facility to entertain their guests. When setting minimums, keep in mind the location (proximity to the stadium, promotional events, the media centre and the airport), the usability of the space, food and beverage pricing and a variety of other inputs to ensure you are not leaving any money on the table.
Set pricing controls
Setting controls on length of stay and mitigating risks are key strategies for hoteliers preparing for large-scale events. To minimise the impact of costly, last-minute cancellations, hoteliers can implement a system of phased pre-payment restrictions and cancellation period policies should be tightened. For instance, if the current cancellation period is 24 hours, it could be changed to 72 hours or even as far out as seven days. These terms and conditions should be clearly stated at the time of booking. If a large number of cancellations are expected over the course of an event, pre-payment plans will allow hoteliers to recoup a large slice of their potentially lost profits, which will then be complemented by last-minute fill-ins within the seven days leading up to the event. Tailored special event cancellation and minimum stay policies can be utilised across not only a hotel’s retail segments but across the wider distribution network including wholesale partners as well.
To best prepare for a large-scale event in India, hoteliers should review their pricing strategy at regular intervals, so any necessary adjustments can be made to leverage or stimulate further demand. Then, following the completion of the event, a review of the effectiveness of their revenue management tactics, their terms and conditions, customer feedback and any increase in return customers should be undertaken. These learnings can shape future strategies and help identify long-term opportunities for the hotel.