Revenue Management strategies to deal with COVID-19 Part 1
By Ally Northfield, Director at Revenue by Design
We are following a strategy of continuing the conversation with our hotel clients as much as possible to reassure them that we are doing what we can to keep a steady hand on the COVID-19 situation. At a high level this relies on us keeping informed, and these are the steps that we are following:
- Keeping up to date with developments on travel restrictions and lockdowns in each country and the projected timelines for their release through Government foreign travel advisory sites and sites such as IATA to keep track of airline travel restrictions.
- Adjusting geo strategies accordingly and proactively advising on how strategies are changing, even with hotels that at present are not seeing a significant drop as of yet.
- Keeping a keen eye on future business to evaluate what business is dropping out and keeping track of this to ensure that when the opportunity arises we are ready to put in place strategies to replace that business where possible. This means re-evaluating high level strategies as well as managing tactical demand influences in the immediate future.
- Releasing restrictions to allow guests greater flexibility in the event they are obliged to cancel and to support re-bookings, maintain good relations with customers and replace lost business through encouraging any potential future bookings. The timeline on this is difficult to interpret since projections from different governments differ depending upon the extent of the virus spread, so understanding geographical source markets is critical.
- Offering alternate dates for prepaid transient leisure is an option, but in many cases guests simply don't know when this will be possible. We are aware that confidence in travelling is likely to be low for some time; my thoughts are that we will be managing the critical impact in Europe through to June/July, for US guests this may be longer, and other regions yet to be affected longer still.
- Where group cancellations are received, keeping track of these to ensure that any sales resource available follows up chases for re-booking especially in cases where groups have postponed without yet offering re-book dates.
Where borders are closed off this is anticipated to be (relatively) short-lived, at present most governments are talking weeks, in this case the only recourse is to look for national travel of which there is a limited amount. At the peak of the virus, if there is also a lockdown keeping people in their houses this also affects national business and tourists, most countries are allowing tourists out, but not in, which limits the impact of overstays, and during lockdown, there is limited to no opportunity for business.
We are aware that hotels are struggling with processing the sheer volume of cancellations of prepaid bookings where channels are offering this, and cash flow is going to be an issue particularly where hotels have taken the decision to be lenient on pre-paid restrictions. To overcome this, we are aiming at this time to encourage forward strategies that support positive cash flow for hotels in the future and avoid deep discounting (short and long term) in an attempt to stimulate non-existent demand.
We are also aware that some hotels may be requisitioned as hospitals, and there may be a requirement to support those hotels in taking on out-bookings from existing reservations in those hotels, unlikely but something worth considering.
Overall, we are avoiding potential complacency - simply because there is no travel we don't stop thinking, or believe there is nothing to do. Markets are swiftly changing and it's likely that the same speed will be applied to lifting restrictions as applying them, so again we need to be aware of this so we can continue to observe opportunities to support hotels, and be efficient at changing strategies.
Whilst we are keeping sight of overall revenue objectives for each hotel and evaluating the impact of strategies applied now on the long term, we are also preparing for some significant long-term market corrections in the travel sector. Many companies have taken huge steps to provide business online during this scenario, and its likely that such changes, particularly those that create efficiencies, will be kept on afterwards. This means less travel.
Overall, we aim to keep positive, supportive for our hotels, communicate effectively and consistently and of course, keep calm...