Jul
27
There are 525,600 minutes in every year. As I write this, most hotels amd most hotel customers appear to be conditioned to waiting until the last one to "get the best deal".
Hell, there's even a website (indeed, more than one website) dedicated to last minute, late availability or "distress" promotions.
They make money by promoting the rooms you didn't have sufficient wit to sell, to the people you didn't bother to engage with your promotion.
Controversial? Let's discuss.
Hell, there's even a website (indeed, more than one website) dedicated to last minute, late availability or "distress" promotions.
They make money by promoting the rooms you didn't have sufficient wit to sell, to the people you didn't bother to engage with your promotion.
Controversial? Let's discuss.
People who book hotels have become conditioned to waiting until the very last moment to book their room. They are so used to getting "deals" - sometimes at crazy discounts - that this behaviour has become the norm.
Yet, if you want to book an airline ticket as part of your trip, exactly the opposite applies. You need to book early to get the discounts. Leave it until the last minute and you'll pay the full price.
Both the hotel and airline industries handle similar customers with similar needs and wants. They provide component parts of the same combined travel experiences; they share the challenges of highly perishable inventory - yet they approach the issue of pricing in completely different ways.
Why should this be so?
Partly, it's because airlines have been using a technique called yield management (or revenue management) for a long time. So too have large hotel companies. However the highly fragmented nature of the hotel industry (there are lots of independent and small group hotels - there are only a few airlines) means that the industry is less capable of applying even rudimentary yield management.
The effect is that hotel managers hold out for full rate. You hear it from hotel owners all the time,
"Our rooms are worth £xxx of anybody's money!", they chant - sitting there, quoting full rate to anyone who asks.
The sad fact is, your rooms are worth no more than what the market is prepared to pay for them.
Sure, at the height of the tourist or conference season, there might be enough demand to fill your hotel many times over. But even then, do you fill at full rate? Not very often I'll bet.
So. Instead of waiting until the last minute to drop your prices in an attempt to stimulate demand, why don't you take advantage of some of those half a million minutes in order to promote some special deals in advance?
That's what the airlines do.
Is it time to take a leaf out of their book?
Yet, if you want to book an airline ticket as part of your trip, exactly the opposite applies. You need to book early to get the discounts. Leave it until the last minute and you'll pay the full price.
Both the hotel and airline industries handle similar customers with similar needs and wants. They provide component parts of the same combined travel experiences; they share the challenges of highly perishable inventory - yet they approach the issue of pricing in completely different ways.
Why should this be so?
Partly, it's because airlines have been using a technique called yield management (or revenue management) for a long time. So too have large hotel companies. However the highly fragmented nature of the hotel industry (there are lots of independent and small group hotels - there are only a few airlines) means that the industry is less capable of applying even rudimentary yield management.
The effect is that hotel managers hold out for full rate. You hear it from hotel owners all the time,
"Our rooms are worth £xxx of anybody's money!", they chant - sitting there, quoting full rate to anyone who asks.
The sad fact is, your rooms are worth no more than what the market is prepared to pay for them.
Sure, at the height of the tourist or conference season, there might be enough demand to fill your hotel many times over. But even then, do you fill at full rate? Not very often I'll bet.
So. Instead of waiting until the last minute to drop your prices in an attempt to stimulate demand, why don't you take advantage of some of those half a million minutes in order to promote some special deals in advance?
That's what the airlines do.
Is it time to take a leaf out of their book?
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