Did You Ever Check What Happens After Changing Your Bar?

How to change or calculate what BAR to apply when, is a subject and philosophy for itself. Let’s assume for this exercise that the hotel knows or knew why to change their rates.

What actually wonders me more is; Who actually checks what happens after you have changed your rates? Are you following up on your rate changes or are you just letting it go until at one point of time you will review them again? Aren’t you curious how the changes influences your business?

Below I draw a very basic pace graph, which simplified shows a pick up curve from 1.1. to 1.5. in 2015 and in 2016:

For those readers who are not used to read pace reports, I will briefly explain what it shows. The purple graph is data from 2015 and the blue one shows the data for the same period of time but for this year 2016. Each dot represents a momentum when the data was pulled or when a revenue manager checked the current pace. Depending on what you are trying to analyse the graph can show total hotel room nights, room nights by segment, for a month in the future; For our purpose it shows a particular day in the future and for room nights picked up in BAR (retail segment).

Now, you belong to the majority of revenue managers, if you change rates and never look at it again! To make a difference, you would need to spent some time after changing your rates – today’s rate changes you will analyse for example tomorrow and today you analyse yesterday’s changes and so on.

Here are some ideas / points to follow-up with once rate changes took place:

• The most basic would be to look at your pick up / pace graph as above. The blue line suddenly stops gaining and even falls behind last years trend. A rate change on April 1st might have been pushed too far.

• Check the pick up on days before and after the day you have done the rate change. That could indicate flexibility in the market and customers pick the cheaper nights.

• Interesting to see and to understand is also, how the competition is reacting to your price changes. Are they setting trends or are they blindly following you. Both can be used for your own benefit.

• Have a look into your pick up report and analyse if there is a price resistance and guests book lower categories than before. That would give you a hint, that customers would go for higher room categories, but are not willing to pay that price point.

• Higher room rates, for example might force corporate clients to shorten their stays, due to restricted travel budgets. Keep an eye on Length of Stay pattern.

• As mentioned above use any BI you can get to verify your trends. OTAs nowadays have a strong understanding what is happening in your market or competition set. Use their provided reports to check if you are losing market share for future dates. Rethink your pricing if that is the case. Use conversion ratios for a better understanding!

• The above graph could be also showing the pick up curve in a particular segment. Don’t only check total hotel performance. As your BAR pricing is mainly targeting customers in your retail segments, you should look deeper than just hotel level changes. If the blue line represents your BAR / retail segment, you definitely priced your product wrong.
• Rates, which include any kind of F&B suddenly stop being booked, might as well indicate overpricing. If your healthy mix of B&B bookings suddenly switch to room only reservations, review your latest price changes!

All the above mentioned points apply for increasing rates, but also should be checked if you are reducing rates. Same “philosophy” behind.

• One difference coming to my mind would be, if you decrease rates you have to be careful that not already booked business starts cancelling their reservations and rebook at a lower rate.

• Another result could be that corporate business starts booking BAR, as this rate is undercutting their contracted rate. Same applies for wholesale business.

Usually, dropping your rates means, you were too aggressive or you misunderstood the pace of your business. Better spend some time in advance before changing rates, rather running behind the market and start understanding the impact of changing your rates.