Seeing many rooms available just days before the date can cause concern.
And the most common reaction is usually to lower the price.
But low occupancy does not always mean the rate is too high.
Before making decisions, it is important to understand what is happening.
First step: analyse demand
The first question should be:
Is there demand in the destination?
We can review the availability and rates of comparable hotels.
If all properties have many rooms available, we may be in a period of weak demand.
If, on the other hand, our competitors are selling better than we are, we will need to investigate why.
Check your visibility
Sometimes the problem is not the price.
It may be distribution.
It is worth checking:
- whether we have open availability;
- whether rates are loaded correctly;
- whether we appear on the main channels;
- whether there are unnecessary restrictions;
- whether the booking engine works properly;
- whether our promotions are active.
A technical error can directly affect sales.
Check your positioning
We should also ask how guests perceive our hotel compared with others.
Do we have good photographs?Are the descriptions clear?Is our online reputation competitive?Do we offer relevant services?Does our rate make sense in relation to our offer?
Sometimes lowering the price does not solve a positioning problem.
Analyse the pace of bookings
Current occupancy does not always tell the whole story.
We may have relatively low occupancy but be receiving bookings at a good pace.
If there is still time and pick-up is positive, it may not be necessary to reduce rates.
That is why it is so important to analyse booking behaviour and not just the snapshot of the moment.
Act on different levers
When we need to stimulate demand, there are more options than lowering the price.
We can work on:
- promotions;
- packages;
- greater visibility;
- digital campaigns;
- cancellation conditions;
- minimum stay;
- direct sales;
- specific markets;
- commercial agreements.
The goal is to find the cause of the problem before applying a solution.
Lowering prices can work, but with a strategy
In some cases, reducing rates may be necessary.
But it should be done in a controlled way.
An indiscriminate cut can damage ADR, positioning and perceived value.
Revenue Management is precisely about deciding when to lower, by how much and for how long.
Because low occupancy is not always solved with the cheapest price.