Have you ever noticed a dip in your reservation calendar between two better-selling periods ? Many of us observe these hollows and in this situation what could be more normal than feeling helpless and doubtful about the solutions to use to fill them ! The temptation is great to lower prices to make up for this shortfall in your schedule. But far from being the best solution, this reflex could even work against you . So let's see together how to boost your performance in such a situation.
This situation is precisely the case shared by Vincent.
He owns several apartments in his town, in the south-east of France, and summarizes his problem as follows:
He usually only accepts reservations of at least 4 nights , and does not know how to fill empty nights of less than 4 nights at the last minute (between two reservations of 4 nights ). He wonders about the best method to approach to fill this void and maximize the performance of his apartments.
Vincent's apartments are already functioning well enough that this situation does not jeopardize his financial situation. But, far from being rare, this situation must nevertheless be taken seriously, because if left untreated it can damage your overall performance.
This problem obviously also concerns hotels. As a hotelier you certainly observe lows when the types of customers change, for example: being full from Tuesday to Thursday with business customers, then having a low on Friday evening and being full again on Saturday evening with leisure customers .
I am therefore delighted with this very interesting business case and will share the following elements with you:
- the quick diagnosis to be made in this situation: is this really a problem? and why sometimes it is, in fact, nothing serious.
- if it's a problem what to do differently next time: 4 mistakes usually made that can be easily corrected
- if it's a problem 12 possible solutions to destock at the last minute . Be careful, I'm spoiling the suspense: reducing prices is very rarely the solution to this situation!
Please note: this article is part of my 52 week challenge . This case is real but for confidentiality reasons the first name has been changed and the city is not mentioned.
1 – Evaluate whether the situation is problematic to boost your performance
When you face this situation the first important thing to determine is whether or not you will have demand for those days . Indeed it is entirely possible that the problem is not one.
Let me explain: Vincent usually requests a minimum stay of 4 nights. In the event that he observes an absence of reservations for 3 nights between two reservations of 4 nights, it is entirely possible that a demand exists for his apartment in 3 nights. (probably even higher demand in 3 nights than in 4 nights).
To assess the level of demand over the period considered and the characteristics of this demand, several solutions are available to you. They aim on the one hand to assess whether your usual demand can help and on the other hand to check whether market demand can help.
Market demand is one that you may not usually meet in full. In this case it can help you fill it out.
For example :
- request for short stays (2 to 3 nights) when usually you force the sale to a minimum of 4 nights
- last minute request when usually you are full several days in advance
- etc
Can your natural request fill the gap?
To answer this question the first thing to do is to study your past performance: have you had demand in similar circumstances in the past ? For what type of period? For what length of stay?
If you identify a demand, evaluate this demand quantitatively: did you have a lot of reservations ? We start from the postulates that demand will continue in the same way, except if you have a different context this year.
This is therefore the purpose of this second stage: to study the current situation . The important thing is to identify points of difference with the past : are we in a slack period or a strong period? Are there events that can positively impact demand? (holidays, trade fair, etc.) Depending on the differences you can estimate the opportunity to have better performance or the risk of having lower performance.
So thanks to these two questions you know how to assess whether with the usual natural demand you will be able to fill this period.
Can the demand seen in the market fill this trough?
You must then look at whether the demand observed on the market (which potentially you do not usually capture) can also help you to fill.
To do this, study the market : for an apartment the richest data source to study the performance of competitors is Airdna . But it is also possible to quickly look on Airbnb, Booking or Expedia directly to see if competitors still have availability for these last minute dates . If you are a hotelier you can also make a few mystery calls to find out if there are many rooms available with your competitors.
If you use Airdna what should you do? Here are the categories that can help you:
- In the “Occupancy” category: check the booking lead time to find out if you still have a chance of seeing reservations arrive.
- Also in the “Occupancy” category: check historical occupancy rates and historical demand to assess whether historically the date was in high or low demand
- Finally in the “Seasonality” category: check the average revpar on the day in question. (the greater it is, the more the demand allows you to fill or sell at a higher price)
With these elements you are therefore able to establish whether this trough in reservations will be able to fill naturally with existing demand on the market or whether you will have to deploy some commercial and marketing efforts to capture additional reservations.
However, do not forget to check that the inventory constraints (length of stay type) make it possible to sell correctly (for example for Vincent, remove the length of stay in 4 nights and put 3 nights or 2 nights depending on the type of demand to capture ).
I am continuing to write this article based on the principle that the natural demand on the market will not fill the “hollow”.
So I focus on the case where we have a problem to resolve.
2 – Actions to put in place for next time.
This step of thinking about what can be done differently next time is crucial to ensuring better performance of your assets. For what?
Having a gap that is difficult to fill at the last minute remains an undesirable “anomaly” in a revenue management strategy. It is a symptom whose cause can be multiple. Below is the list of different possible causes: I will let you evaluate what may concern you and initiate corrective actions in your activity.
Possible improvements in tracking figures
If the problem lies in the fact that you are not tracking your figures sufficiently, two cases are possible:
- you are not tracking your performance enough and you identify this dip at the last minute. Possible corrective action : allow at least 2 hours per week to understand and monitor your figures for all weeks available for sale in the future.
- you monitor your figures overall but do not have sufficiently detailed or advanced knowledge of your performance. So you could not have anticipated this situation. Possible corrective action : create a tool to monitor your performance. In this regard, I strongly recommend that you read the 3 pillars of revenue management which will allow you to follow my recommendations on the creation of a monitoring tool free of charge. (inscription at the bottom of this article)
Possible improvements to optimization actions
If it is the optimization choices you made that were blocking this time, here are different suggestions for next time:
- you accepted one or more group/company reservations that should not have been accepted and which created this “hollow”. Accepting a group or negotiated price is an error if (and only if): this reservation brings you a lower turnover than what you could have done without the group . For example, if taking a group creates an unsaleable gap of 2 nights: the turnover of the group must cover the turnover on the days reserved as well as the turnover on the days which become unsaleable. Possible corrective action : perform shortfall calculations when you need to give a price for a bulk request (a group or a reservation of several nights)
- The revenue management strategy put in place was not the right one. Even if you are an expert in revenue management, it is always possible to make mistakes. The error itself should not be considered dramatic because it is a source of learning. On the other hand, it would be tragic not to return to the case, and not to learn from it the necessary lessons for the rest of the activity. Essential corrective action : Evaluate why your strategy was not successful and how to do it differently next time . You can also approach the situation in a fun way by testing your possible solutions on other similar periods (in level of demand) to learn more quickly.
This type of dip, if well anticipated, makes it possible to establish the most appropriate revenue management strategy and, if necessary, to launch a marketing or communication action over the period in question to give yourself every chance of fulfilling it.
3 – How to save furniture at the last minute?
We have therefore seen the first two steps to follow in the event of unforeseen dips: assessing whether these dips are really problematic on the one hand, then on the other hand ensuring that this situation will not recur in the future.
This is all very nice, you might ask, but what do we do with Vincent's 3 empty nights?
There are several clearance solutions that can allow you to respond to the immediate urgency of selling. With, obviously, the aim of not being in this same situation a second time in the future.
These solutions being also numerous, they are the subject of a second article which will allow you to discover them.
I therefore invite you to continue reading here to discover the 12 solutions for destocking at the last minute .
If you would like to contribute to this challenge and give me one of your current issues: do not hesitate to write to me in the comments!
Please note: I sign a confidentiality clause with my interlocutors. Names and cities may be modified to comply with this clause.