Flash sales don't always add up for hotels

Late demand and haphazard booking patterns are a growing headache for hoteliers. But panic-driven room discounts aren’t always the answer. Jon Siberry, Revenue Consultant for Z Hotels and Sarova Hotels, explains why hotels need more than one way to fill their rooms, and nerves of steel...

How do you forecast demand when the bookings don't arrive until the last minute?

Hoteliers are increasingly seeing rooms booked within mere days or weeks of arrival. A few years ago, that would have been unusual. Now, it’s becoming the norm. We used to be able to rely on booking patterns from previous years. Look at the pace, compare it with last year, watch the pickup, make decisions. This approach is becoming much harder to rely on.

A hotel can look worryingly empty a few weeks before arrival, only for bookings to flood in at the last minute. A thin-looking calendar leaves revenue teams with a difficult choice: hold their nerve and wait, or start discounting in the hope of getting heads into beds?

Neither is necessarily the right answer.

If booking behaviour is changing, hotels need to change the way they respond to it. That means having more than one strategy ready to go, from holding rate and waiting for demand, to using targeted channels and flash sales to create demand where it doesn't already exist.

Speaking on my latest Hoteliers' Voice podcast, Jon Siberry, Revenue Consultant for Z Hotels and Sarova Hotels, explained how he's navigating a market where yesterday's booking trends don’t necessarily tell you what tomorrow will bring.

When the bookings arrive late

“There is no pattern that you can rely on now,” Jon explained. When he looks back at demographics and traveller behaviour over the last 6-12 months, there are no clear trends. “The hotel marketplace is changing rapidly, all the time. All trends are very ‘untrendy’; they're all out the window. Every day is different.”

However, the last-minute booking pattern is something many hoteliers have been discussing widely. “The lead time to booking is really, really short,” he said. “We're getting a lot of pick-up within 14 days of arrival.”

That can make a hotel look worryingly empty for the foreseeable future. Then the bookings arrive. “As they said in the old Field of Dreams film, ‘if you build it, they will come,’” Jon said. “But you've got to have nerves of steel to hang onto that philosophy.”

The problem is, ‘nerves of steel’ isn't much of a commercial strategy. And hoteliers certainly can’t hope the last minute bookings will reliably come, month in, month out. This is where having different options becomes important. Sometimes the right move is to hold your rate and wait. Sometimes it's to adjust pricing. And sometimes you need to create demand rather than wait for it to arrive. That's where flash sales come in.

Creating demand that wasn't there

A flash sale isn't simply about selling a room more cheaply.

The interesting thing about the customers Jon sees through platforms such as Secret Escapes and Travelzoo is that many book on a whim. “Most of these customers are people who are not necessarily planning to travel,” he explained. “This is why we call them impulse sales. The email arrives in their inbox, and they look at it and think: ‘this is a great deal, I'd be stupid not to take it.’”

There’s a big difference between discounting a booking you would have got anyway, and creating a booking that wouldn't otherwise have happened.

For Jon, Secret Escapes and Travelzoo are particularly useful for low-demand dates, winter and off-season periods. And the hotel controls the amount of inventory it releases. Sometimes it’s just a couple of rooms. “Once it’s gone, it’s gone.”

Choosing channels carefully

So, flash sales have a place in the precarious world of bookings hotels are currently navigating. But Jon has spent years identifying which flash sale platform is right for his hotels.

Whenever he’s considering a new channel, his first question is brutally simple: “What’s the cost going to be to me? What’s the margin of commission the channel wants? If they get the answer wrong, that’s the end of the conversation.”

Commission is critical when hotel margins are already under pressure. But it's not the only consideration. Hotels also need to look at the audience, distribution network, connectivity and, crucially, rate integrity.

“One of the big, big issues hotels have is affiliates shaving pricing and putting it out in the market a couple of pounds cheaper,” Jon said. “That ruins price integrity, makes the hotel look silly, and OTAs pick up on it.”

Considering the audiences different channels reach is also important. Jon has worked with Travelzoo and Secret Escapes for years, because they reach customers who aren’t already on the hotels’ radar. “We're tapping into two separate markets; it's not the same customers on these two different platforms.”

Jon also explained how the wrong channel can bring the wrong type of demand, particularly for hotels with a strong positioning or a more premium guest experience. It's a reminder that filling a room is only part of the equation. Who you fill it with matters, and could have a knock-on effect in guest experience and reviews if you get it wrong.

Keep the toolbox open

The bigger lesson isn't simply how to use flash sales wisely. It's how to respond when the old booking patterns become harder to rely on.

Demand is arriving later. Consumer behaviour is changing. When the calendar looks worryingly thin, there isn't always a case for slashing rates. Sometimes the smartest move is to hold your rate and trust the last-minute demand will arrive. Sometimes the numbers tell you it's time to adjust pricing. And sometimes you need to create demand rather than wait for it, putting a carefully controlled allocation in front of a new audience.

Flash sales can do that. But they're one tool, not the whole answer. Jon's approach is to keep testing new channels, while being rigorous about cost, customer fit and rate integrity. The goal isn't to find one perfect way to fill a hotel. It's to build a toolbox that gives you options when the market refuses to behave predictably.

Media Contact

Ryan Haynes

HOST | Director | Lead Consultant [email protected]