How Can Hotels Predict & React To Demand Changes?

April 28, 2022 | Duetto Content Team

While most markets have somewhat stabilized relative to the past two years of uncertainty, things are still different to 2019:

  • Demand remains lower, but the volatility of that demand has improved
  • Cancellations are no longer as prevalent
  • Groups bookings are more secure than they were just a few months ago

The Return of Groups & Events

Our latest  Pulse Report data shows this clearly. From June onwards group pace is either on par with 2019 or is trending higher in each month during the fourth quarter of this year.

I was recently at an industry event in South Carolina, and while it was smaller than what we are used to in terms of these events, it was taking place. As the events calendar does come back to life, hotels are having more opportunities to yield.

We’re hearing positive stories from clients too. Boyne Resorts for example recently negotiated a buy-out event with a tech company for its Big Sky Resort. This is a very promising sign.

For properties located close to stadiums and convention centers, this consistency of high-demand periods is something that is helping them to strategize. They can see demand forming further out than they have in the last couple of years, and this is vital to predicting and reacting to demand.

But sometimes these events fall at the last minute. How can hotels react quickly to ensure their rates are optimized in line with the new influx in demand?

How Duetto Helps

Our client Charlestowne Hotels have certain properties that rely on a calendar of events and concerts for demand peaks. Using Duetto, the team can see the impact of when a concert is announced because there's a huge influx of demand immediately. Duetto will react to that pop in demand, whether it’s six months, 90 days, or three days before arrival, and flex rates straight away.

Johnathan Capps, Chief Revenue Officer, Charlestowne Hotels, fully automates this with Duetto, removing rate caps and letting the system find the true market value of these high-demand dates.

 “The first instance we had of that was in October 2021 when the Brandi Carlisle concert was announced for September of this year. Duetto moved the rate up $210 over three days," he explained.

When demand is still uncertain, and you potentially have concerts and events dropped on the calendar last minute, being able to react to this immediately ensures you are not leaving money on the table.

For properties like Charlestowne, which is running revenue on our AutoPilot, you don’t even need to be in the office for the system to react. If an event is announced during the weekend or while you are on holiday, it will see a spike in demand and react to it.

And hotels can set conditional rules to how their AutoPilot runs. For example, you might only want AutoPilot to kick in if you are below 45% occupancy and 30 days out. This controlled automation enables teams to set parameters for their revenue automation.

Managing Costs

One of the biggest challenges facing hotel management right now is labor supply. Labor is the largest overhead for a hotel, but equally one of the most critical to guest satisfaction.

When demand is difficult to predict, how can operational management accurately set staffing schedules to ensure they have the right team members in place? This is especially difficult today, as the industry is suffering from a talent drain following the ‘great resignation.’

And it’s here that data insights into demand changes are also key to success. Make sure you are sharing them with your operations team. Our BI tool, ScoreBoard enables teams to all work from the same data set, keeping everyone informed.

Hotels also need to ensure that they are communicating with the guest. If housekeeping is going to be limited, be sure to inform the guest in advance.

Our partner, ReviewPro, helps hotels gauge customer sentiment, and this is a great tell-tale sign if you have limited services too much. This type of metric has a value to the revenue team too. You must ensure you are delivering value for the price paid. Consider your offering, consider that of your comp set, and look at the price you are achieving relative to that.

Staying Competitive

As hotels prepare to ramp up their services but may still not be at full operation (for example, the spa is not open or the F&B offering remains limited), benchmarking against the comp set enables revenue teams to remain competitive with the market and provide a fair price based on the services being offered.

Hotels on Duetto can set a percentage target for where they want to be against the market. For example, new properties coming to market with a soft opening may want to take a more conservative approach to rates, while full-service properties seeing high demand will want to set the benchmark high.

Our client Sandman has used this functionality with great success as they have re-opened their portfolio.

“We've got properties in very different positions right now amongst the portfolio and those properties are set up slightly differently and going through some different challenges. Duetto has allowed us to optimize those properties differently.” Michael McNames, Director, Revenue Management, Sandman Hotel Group

Adapting To The Unpredictable

Early in the pandemic, Duetto was quick to make changes to better help hoteliers proactively navigate through the market uncertainty surrounding them. We adapted our algorithm to emphasize short-term history and forward-looking market demand signals to provide more accurate recommendations. Duetto’s short-term forecasting rules became quickly available to all hotels running on Duetto.

Our short-term forecast rules enable teams to shrink the period that they were including in future forecasts. Teams were able to set very specific rules, such as “I only want to use the last four weeks of trends and I want to weight that 100% towards my future forecast.” That was a very common rule.

As the market returns, I would recommend hotels layer in some sort of long-term forecasting because your seasonality is still going to be relatively similar to before the pandemic. For example, Boyne Resorts as a simple example knows that they're going to be slow during summer because there's no snow, whereas Mediterranean beach resorts, such as our clients at Palladium Hotels & Resorts know summer will be their peak season.

And you can include more than just last year in this long-term forecast, as Duetto lets you look back by up to five years. This helps you create a law of averages. Seasonality will still be there, even if the peaks are not so high.

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