Strategic Revenue Management for Hotels & Resorts Post-Covid

August 29, 2020

How should hotels and resorts position themselves in the wake of Covid? It is understandable, expected even, that travelers around the world with pent-up demand to travel will be bargain-shopping. On the other side of the equation. hotels are faced with the inertia of keeping rate integrity intact for the better of the hotel, destination and industry.

A recent trend we are seeing in key destinations in the Caribbean is a sharp increase in BAR pricing coupled with extensive discounts approaching 50% for advanced purchase non-refundable rates netting cost-neutral pricing. A recent market shop of hotels in Aruba will support this observation. Though the premise of doing so can be justified with the need to boost short-term cash flows, another thought is to be first-to-market to capture the attention of bargain-hunters. If this continues, we can be sure to see more hotels follow this model, dramatically increasing BAR rates in the marketplace with deep discounts added, counter-intuitive to previous demand interruptions.

A recent STR presentation indicates China now has a 67% occupancy, compared to 40% two months ago. This is encouraging news for the rest of the hospitality world as we gradually recover.

Another observation from the STR presentation indicates leisure travel will return first with group and corporate travel much later. For hotels in the Caribbean, we are witnessing this gradual increase in leisure travel, though much slower than other areas of the world. In addition, travelers are booking with much shorter booking windows. Hotels revenue management departments, whom most reliably have had their focus on 120-day booking windows in the past, will focus greater attention to this period leaving the opportunity to capture longer period demand. The booking window post 120-days is a blue ocean of opportunity.

Key Hotels & Resorts – Key Commercial Services Team