How does revenue management deal with declining demand in “crisis-related” times?

Do not reduce rates

A reduction in rates will not increase demand: guests who have to or want to travel will not change existing travel plans. The important thing is not to repeat the mistake made in 2010 and reduce rates, but to remain true to the motto “the right price, for the right customer, for the right product”. A price correction – upwards – after the end of the crisis is, therefore, a greater challenge

Overwrite revenue management systems

RMS systems tend to want to reduce rates due to the lack of pickups. The coronavirus is an unforeseen event, similar to the outbreak of Eyjafallajökull. It is explained to the system that the missing pickup has nothing to do with a normal decrease in demand.

loosen cancellation conditions

In the current situation hotels have sufficient rooms available. To give guests flexibility, relaxed cancellation conditions at “normal” daily rates are worthwhile. This ensures that business with customers willing to pay is crowded out – full-paying business is unlikely to be rejected as a result.

Offer promotion rates

This seems to contradict points 1 and 3, but if large discounts are required, then at least not via the daily rate (BAR, RACK) – but via promotions. It is important to communicate clearly that a cancellation or rebooking is not possible.

Group cancellations

The handling of the cancellation costs is left to the discretion of each hotelier. However, it is recommended to insist on cancellation costs. As a concession to the customer, 20% of the cancellation costs can be deducted from future bookings as a reduction for new bookings.

Contact for revenue & distribution

Gilbert-André Ghammachi

m +491522 98 79 862

e gilbert.ghammachi@mrp-hotels.com

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