However, if a hotel does not properly plan for a major event, they risk displacing current loyal customers and creating negative guest perceptions that can have an impact future business.
To maximise profit opportunities from major events, hoteliers should consider a wide variety of factors, including forecasting and pricing strategies, as well as restrictions that may or may not be enforced.
Here are the top seven strategies to help hotels prepare for major events:
- Understand demand and feeder markets
A significant challenge for hotels when it comes to major events is that properties may not know the primary feeder markets until just before the actual event. For sporting events like the Asian Champions League final, most people aren’t going to pre-pay for rooms and buy airline tickets until they are sure their team is going to be there.
To gain insight into demand for guest rooms in the lead-up to major events, hoteliers should research previous major events of a similar nature and closely monitor leading indicators of inbound visitors, such as ticket inventory and ticket sales pace for events near their property. Hotels can also partner with the local organising committee for major events to monitor the incoming attendance, which can act as an indicator of likely demand.
- Build an accurate forecast Develop a forecast.
A hotel cannot properly prepare for a major event without a forecast. While even a rudimentary forecast based on an assumption of high demand is better than nothing, advanced revenue management software automatically gathers and processes the key demand forecast indicators needed to refine this forecast as the event date draws nearer. Additionally, revenue management software can illustrate what will happen to occupancy levels and booking paces at different price points, across different segments, and the impact this will have on revenue optimisation. The ability to effectively forecast expected demand by segment will highlight the most valuable customers to target through sales and marketing activity.
- Tailor pricing strategies to your forecast
The pricing strategies in the lead-up to a major event will have to be carefully managed, and the focus should be 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, a hotel can look to close out all lower rated segments if required, as well as sell room types as premiums, limit free upgrades and make the most of any upselling opportunities. However, on lower demand days, these restrictions should be relaxed so as not to discourage potential customers from booking with the hotel.
To maximise revenues over a major event period, hotels should also consider implementing flexible rate structures. For example, a hotel could offer slightly discounted non-refundable rates for those who are certain about their travel plans. Or, while there are still several months or weeks to arrival, a hotel may want to make a percentage of certain rooms available with flexible cancellation policies. Depending on the property, a hotel may be able to fill up higher-priced and harder to sell inventory that, in the event of a cancellation, is now available for a much higher market rate once timing-related guest desperation sets in.
- Create and market personalised packages
Personalised guest packages tailored to major events can help differentiate a hotel from its competitors. When multiple hotels are competing for bookings during a big event, those with the most appealing or unique packages often stand out as being customer-centric and attentive to guests’ needs, which can enhance a hotels brand position. For example, during a major participatory event like the Mumbai Marathon (which has some 45,000 competitors), a hotel may want to create and market room packages that include a post-event recovery evening featuring in-room dining and a massage. That’s just one example, but this is an opportunity to get creative (and ideally develop packages that tie in high-profit margin, easily executable offerings that leave a positive impression).
- Implement overbooking strategies
Major events deliver a large influx of guests, including last-minute bookings, so it is critical that hoteliers have the appropriate overbooking strategies in place. While hoteliers traditionally use overbooking strategies to counteract last-minute cancellations, major events deliver substantial numbers of potential new hotel guests and generally fewer cancellations from tighter booking terms and conditions. This means that hoteliers need to be careful with the overbookings they take, otherwise they will be forced to send a potential new guest to a partner or competing hotel. This will 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. Should hoteliers need to ‘relocate’ a guest, there should be established standard operating procedures for communicating with the receiving hotel, notifying guests, and providing compensation, such as transportation or dining vouchers, to the guest. This helps mitigate the likelihood of guest complaints or negative online reviews.
- Optimise function and event spaces
For hotels with function and event space, it is wise to set premium food and beverage minimums for any groups wishing to block space. For major events with a large corporate audience like the Australian Open Tennis Final, it’s an opportunity for companies to impress clients, so it is not uncommon for hotels and restaurants to be completely bought out by a company. These groups are usually willing to pay a premium for the right facility to entertain their guests. When setting minimums, keep in mind the location (proximity to the stadium, satellite 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.
Hoteliers should also factor the total value and profitability of any group opportunities and weigh that against transient demand. Keep in mind that it typically doesn’t take much food and beverage spending to exceed the revenue and profit generated from an individual traveller.
- Review cancellation policies
To minimise the impact of costly, last-minute cancellations when major events are occurring, 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 significant slice of their potentially lost revenue, which will then be complemented by last-minute fill-ins within the seven days leading up to the event.
Learn and adapt for future success
There are always key learnings to be gained from operating a hotel through any major event period. Post-event, hoteliers should conduct a thorough review of what worked and what didn’t, and from this data, look at how improvements can be made for any large-scale influx of guests in the future. These learnings can shape future strategies and help identify long-term opportunities for the hotel.
For more information on how IDeaS can help your hotel make the most of major events and more, please visit: www.ideas.com
