Home Revenue Manager Revenue managers cautious of same-day channels

Revenue managers cautious of same-day channels

Feb 14, 2015  By 
The booking window in general might be expanding as the hotel industry continues its up cycle, but so too has the share of same-day bookings, revenue managers report.  
Facilitating the trend is an array of last-minute booking apps and channels, such as HotelTonight
More recently, online travel agency Booking.com entered the fray with its Booking Now app, which allows guests to book hotels rooms within 48 hours using only two taps on a smartphone. 
“Rooted in and developed out of a deep understanding of proprietary customer data, the launch of Booking Now supports the growing importance of mobile when it comes to booking accommodations within 48 hours. According to Booking.com data, worldwide almost half of reservations made within 48 hours are booked on a mobile device,” the OTA explained in a news release
Those findings were corroborated in recent Phocuswright research. 
More than one in four hotel searches on mobile sites are within 24 hours of check-in, according to “Parsing shop and book: How OTAs, airlines and hotels compete on the desktop and mobile Web.” And bookings made same day skew heavily (more than 70%) in favor of OTAs over brand.com. 
Use of same-day channels varies
“With the norm of everyone now having smartphones, more guests are using apps to book their travel, and it’s typically on the fly,” said James Bethany, corporate director of revenue management at Sandy Springs, Georgia-based Peachtree Hotel Group, via email. 
The company, which has 50 primarily focused-service hotels in its portfolio, uses last-minute bookings channels sporadically based on distressed inventory, he said. 
“We typically don’t play in the lower-average-rate booking channels due to the low return to the bottom line. However, in some cases, we make the decision to open those channels, and it’s generally market-specific,” Bethany said. “This strategy is only used to fill the distressed inventory. Since our product is a perishable commodity, what we don’t sell is lost revenue and cannot be recouped once the day is gone.”
Vicki Schell, VP of distribution for Vantage Hospitality Group, adopts a similar, price-conscious approach at the Coral Springs, Florida-based franchisor, which counts more than 1,200 properties worldwide.
“These channels present an opportunity to attract incremental bookings and are an efficient way to move last-minute, excess inventory,” she wrote in an email. 
Vantage’s share of same-day bookings increased to 31.4% during 2014 from 29.8% in 2013, Schell said. http://www.vantagehospitality.com/brands.cfm
“Managed properly, these rates should be non-refundable, non-changeable and should allow hoteliers to yield to their advantage,” she added. 
Others take a more absolute approach. 
“We’re not a big fan of them,” said Donald Urbahn, VP of revenue management at Shelton, Connecticut-based New Castle Hotels & Resorts, a third-party manager with 29 hotels in its pipeline. 
“The main reason I don’t like them is because it takes away from the rate integrity of the property,” he added. “We’re constantly trying to stay in parity across all channels. We want guests to know that if they go to any OTAs or they go to the brand site or call the hotel, they’re going to get the same offering so they’ll be able to choose the channel that’s best for them.”
Same-day bookings for New Castle have dropped 2 to 3 percentage points in the past year, Urbahn said.
Forecasting not too fuzzy
The general growth of same-day booking activity is not wreaking havoc with revenue managers’ ability to forecast.  
“We have always had a relatively high percentage of same-day bookings, so it has not had a significant impact yet on our ability to forecast demand,” Schell said. 
“It has impacted our ability to forecast somewhat, but the key to an accurate forecast is to constantly watch the booking trends and averages of lead time bookings for each hotel,” Bethany said. “Since trends are changing constantly, it does make it difficult to trend out at times.”

About Patrick Mayock

Patrick Mayock

Patrick Mayock is Associate News Editor with HotelNewsNow.com. Patrick specializes in writing articles and creating multimedia news content for HotelNewsNow.com’s Web site and daily newsletter. Patrick joined the HNN team after a tenure

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