Extended stay properties are a rapidly growing segment of the hospitality industry and face unique challenges and opportunities due to a dynamic set of market conditions inherent to the sector. How can these properties best overcome challenges, drive revenue and increase the value of properties? They can achieve this through better data: from how it’s captured to how it’s processed and analyzed. The payoff manifests itself in three areas of revenue management that, when aligned, support continued growth through pricing, business mix and allocation of inventory.
#1 Pricing: Critical piece of the puzzle
A hotel with guests staying one or two nights faces common pricing challenges, but for extended stay properties with guests staying a week, a month or even longer, identifying and offering the right price points becomes even more critical. Pre-negotiated group rates add an additional complexity, as does the reality that some guests will extend their reservations (e.g., a construction crew facing delays) and others will shorten them (e.g., a project team that completes its work early.) Tracking historical patterns and observing real-time transactions means working with a revenue management system that offers granular details and sensitive controls to fine-tune operations. What’s more, the best system will also help executives go a step further and optimize their business mix.
#2 Business mix: Guests, groups and demand
Another insight that better data reveals is optimal customer segmentation. Which individuals and groups are most desirable and at what times of the year? Knowing that the time period between December and March is often the slowest in terms of group business traffic, adjusting the mix (perhaps with an eye towards individual travelers) is beneficial. Or, for a company negotiating a new contract, how low is a reasonable rate knowing their employees will likely displace other prospects? Better data helps make better decisions and it takes an advanced revenue management system to provide answers and operating controls.
#3 Inventory: Allocating what is available
Data as a competitive advantage becomes a true strategic asset when it supports more accurate forecasting, which is the fundamental basis for all effective revenue optimization. The insights gleaned can inform more precise inventory allocation of unit types against the projected demand in a competitive environment. What rates and availability will prospective guests see? Is overbooking acceptable when demand is at its peak, knowing that guests in certain categories are likely to cancel or cut their stays short?
Everything comes back to data. Optimizing revenue for extended stay properties goes beyond hunches, guesswork and even learning from mistakes. The variables are too complex and the competitive threats are too powerful. Yet on the upside, the opportunities are too significant. Innovations in today’s revenue management systems provide advanced and far-reaching solutions. It’s time to harness data and fulfill the potential of extended stay properties.
About the author
Joerg Happel is a senior product manager with IDeaS Revenue Solutions. After an accomplished hospitality career with leading hotels around the world, Joerg Happel joined IDeaS in 2006 to focus on growing market needs and the continuous development of innovative, leading-edge revenue management solutions. You may contact him on [email protected]