Strategizing for Winning in Uncertain Times Starts Now

Uncertainty and volatility are threatening hotel occupancy and profitability in markets all over the world right now. But, forward-thinking hotels can formulate strategies that prepare them for the effects of sudden changes on the travel industry.

Many hotels in Paris recently have turned to massive discounts, some higher than 50 percent, to fill rooms during a period of low demand. Terrorist attacks in Paris, Nice and Normandy in the past year have contributed to a huge falloff in tourism demand in the country. France’s junior minister for tourism told the London Telegraph that the occupancy rate in Paris for the second half of July was only 32 percent, compared with 77 percent in the same period a year earlier.

On the other hand, some negative events produce a positive effect on a market’s travel or tourism sector, as the “Brexit” vote in June has for the United Kingdom. Since that referendum, the value of the pound has dropped significantly against the dollar and the euro, meaning that trips to London and surrounding cities are on sale. Accordingly, flight bookings to the U.K. rose more than 4 percent in the 28 days following the vote compared with a year earlier.

No matter where your hotel is located, and no matter what circumstance is affecting your market, it’s important to have a strategy to cut through the noise. What hotels and their revenue management teams need to know in the midst of a crisis are a) whether the prevailing story about traveler demand is true, and b) if that story is relevant to the hotels in that market.


Your hotel could look in its competitor rate shops to see if the market as a whole perceives that negative news is having an effect on travelers’ demand for that area. Has the entire market concluded that the sky is falling and slashed room rates? Or are only a few properties over-reacting?

I would argue that the most valuable data can be found on hotels’ own websites. A fundamental part of modern revenue management is to look at web shopping data on your own site and to see if conversions from searching to buying have fallen off.

As bookings come in, while the market is adjusting to its newfound volatility or uncertainty, pay attention to your pickup. It can start to build a more complete picture of trends that are emerging from some kind of crisis—but it’s a slow-moving change, so don’t over-react. Forecasts going forward from that period will be inaccurate in the early stages, but tracking how consumers react to your pricing allows revenue managers to adjust in real time and to make better rate decisions.

Ultimately, the more data you gather, the better you’ll adjust your revenue strategy to fit new conditions.

Imagine, for instance, your market suffered some kind of security issue like the ones currently affecting Paris. You could surmise from your pickup pace and your on-the-books reservations which customer segments are most affected by those concerns. Perhaps business travelers aren’t affected in the short term—after all, that important meeting or conference still has to take place—but fewer leisure travelers are looking or booking a vacation there.

It would be foolhardy to raise rates across the board right after some incident. Instead, to ease leisure customers back, some targeted promotions could be run on an OTA package channel. But the hotel should leave the corporate negotiated rate for business travelers where it is, in that instance.

Really, there’s always some uncertainty involved in any industry as complex as travel and lodging. But when that instability spikes after a crisis, don’t panic. You can’t predict everything that will happen, but you can plan ahead for how you’ll respond and then react in real time.

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Patrick Bosworth is CEO and a co-founder of Duetto, a revenue strategy platform company based in San Francisco.