Third Party rooms can be turned on and off like a spigot. The reality of that situation is that the people in control of the inventory selling it, like the sold situation described above, should be managing it correctly. I know what I would have done, seeing the spike in selling, I would have limited the flow of rooms on the third parties to capture demand through more revenue generating channels (i.e. Call Center/ GDS/ Travel Agency). Only if we were getting closer and it seems those avenue where not producing, would I even imagine opening up to bookings from a third party source. Selling a hotel is more complex than it used to be, as with so many variable, as well as sources of potential business, it has to be watched closely.
If you see a low rate, on a night that you sold out, consider several factors. When was the reservation made, and at that time, was the hotel sold out. As well, if your rates are lower, there may be a mandatory minimum inventory that your third party contract requires. Also, depending where the source is coming from, the revenue manager may have considered maximization of overall revenue acheivable through a blended rate and length of stay, if the demand in one place was so great, it served to sell out the hotel. Finally, a reservation with a longer stay would entice me to sell, as long as I was making a good profit it, even at a third party rate.
To sell on the day of arrival is good as you describe, but to be honest, it is a practice best served if you have a historical no show factor above 3-5%. As well, this is also compensated for by overbooking, to increase revenue by no show profit. I know it is great to make a fat rate on a same day walk in who is desperate for rooms, but unless you have a great ROI on this gamble, more and more hotels truly wont risk it unless you have a no show factor you can count on, or have a random happenstance where they pop up.
Hotels operate with a perishable goods mentality. If you consider the factor of total rooms in a month and a per unit price on that value, you are looking an overall percentage growth if you have more sellouts at a blended rate. This is something banks love to see as it represents "in the month" growth that they feel will justify reports, when paying a mortgage. Also it helps cashflow for the month to keep salaries flowing. All I mean is that the way we used to sell is not the way we sell now. Some old school owners seem to be lost in the worry of day to day profits and not seeing an overarching picture and the benefits they can reap from it if they truly embrace it.
Thanks for letting me ramble...I look forward to your thoughts as well, I love different perspectives on this topic as any and all opinions are a learning experience for me.
If you see a low rate, on a night that you sold out, consider several factors. When was the reservation made, and at that time, was the hotel sold out. As well, if your rates are lower, there may be a mandatory minimum inventory that your third party contract requires. Also, depending where the source is coming from, the revenue manager may have considered maximization of overall revenue acheivable through a blended rate and length of stay, if the demand in one place was so great, it served to sell out the hotel. Finally, a reservation with a longer stay would entice me to sell, as long as I was making a good profit it, even at a third party rate.
To sell on the day of arrival is good as you describe, but to be honest, it is a practice best served if you have a historical no show factor above 3-5%. As well, this is also compensated for by overbooking, to increase revenue by no show profit. I know it is great to make a fat rate on a same day walk in who is desperate for rooms, but unless you have a great ROI on this gamble, more and more hotels truly wont risk it unless you have a no show factor you can count on, or have a random happenstance where they pop up.
Hotels operate with a perishable goods mentality. If you consider the factor of total rooms in a month and a per unit price on that value, you are looking an overall percentage growth if you have more sellouts at a blended rate. This is something banks love to see as it represents "in the month" growth that they feel will justify reports, when paying a mortgage. Also it helps cashflow for the month to keep salaries flowing. All I mean is that the way we used to sell is not the way we sell now. Some old school owners seem to be lost in the worry of day to day profits and not seeing an overarching picture and the benefits they can reap from it if they truly embrace it.
Thanks for letting me ramble...I look forward to your thoughts as well, I love different perspectives on this topic as any and all opinions are a learning experience for me.
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