The old cliché is right: all good things do come to an end. But that doesn’t mean all endings are negative. Endings sometimes push us to change tactics in new and interesting ways perhaps not previously explored. And that opens opportunity.
One “good thing” predicted to come to an end for hoteliers: continued lofty occupancy rates. At or above record levels for the past few years, according to STR’s Jan Frietag, the end of the current bullish hotel cycle is nigh and could be reaching its waning days.
We’re already seeing occupancy declines for 70% of the country’s top 25 markets, according to a report delivered at the Hotel Data Conference. Plus, according to Hotel News Now, STR numbers indicate 2017 full year occupancy will be the same level as 2016. STR’s research also indicates occupancy will decrease -0.2% in 2018. While that’s a relatively small number, it does signal the need for a tactical shift. Now is the time to prepare for an uncertain future, ensuring your profit potential continues to remain high.
There is good news: pricing power still seems to be intact, according to industry predictions. STR believes that ADR and RevPAR will continue to grow in 2018 by 2.5% and 2.3% respectively.
But capturing higher rates is not automatic. It takes smart tactics to earn more revenue while selling fewer rooms. Too many hoteliers, for example, start undercutting prices when occupancy starts softening, a fear-based reaction that can be easily combated with the right technology. One valuable tool is a cloud-based property management system, which helps manage rates automatically. That helps ensure a hotel is always achieving the maximum rate for a room on any given night of the year.
For example, the SkyTouch Hotel OS® has rate management features that help hoteliers maximize rate opportunity no matter where rooms are visible for sale on the internet.
SkyTouch’s cloud-based PMS has the built-in ability to create up to nine Best Available Rate (BAR) levels, as well as four demand types and unlimited “seasons.” This enables adjustments during peak and shallow demand periods. In fact, the system is flexible enough to attach a rate for every demand type a hotel experiences throughout the year.
Because hotel rates are typically fluid – changing throughout the year, or even week to week or day to day, in some cases – the SkyTouch Hotel OS compensates with flexible hotel rate management. The SkyTouch Hotel OS allows for derivative rates based on BAR rates, which adjust automatically every time the BAR rate changes. It’s an easy approach simplifying rate management, ensuring all rates change when you want them to, and helping to maximize financial opportunity during high and low demand days.
Also, the SkyTouch Hotel OS provides access to a large pool of OTAs. By placing rooms on many OTAs, rather than a select few, hoteliers can sell more rooms at an overall lower commission rate. That means, each time a room is sold at a lower commission rate, it’s removed from the inventory at those OTAs with higher commissions. This helps deliver more profitable reservations to the hotel’s bottom line.
With the SkyTouch Hotel OS, maximizing rates is no longer a guessing game or an emotional response; it’s a smart strategy protecting against softening occupancy.
