Eclipsing your Revenue: How to Maximize Profit During Special Events

August 21, 2017 marked the first total solar eclipse to travel the width of the continental United States in nearly 100 years. People from all around the world traveled to a 65-mile wide strip stretching from Oregon to South Carolina called the “Path of Totality.” Parking lots were either closed or packed and some highways felt like parking lots. How did this affect the hospitality industry, you might ask? Picture thousands of guests wanting to avoid the traffic and secure a comfy spot in the path of totality. Properties began to sell out before the eclipse glasses even went on sale. Some people even booked their stays YEARS in advance and a good chunk of people are already starting to book for the next total eclipse (This one will go from San Antonio, TX to Maine on April 8, 2024, so mark your calendars).
With their rooms and campgrounds fully booked, many property owners felt content staring up at the beautiful diamond ring in the sky. There were property owners, though, who smiled a bit wider than others. Picture a couple, Kim and Eric, who own a property in Tennessee, directly in the path of the eclipse. As the eclipse approached and their rooms began to fill up, Kim and Eric started using supply and demand tools to boost their bottom line. Sounds high-tech but it’s rather simple. They raised their rates by a few dollars, which helped cover unexpected costs they would face through the year, like their water heater bursting in the middle of their busy season. Dynamic pricing is simply adjusting rates based on demand. Everybody does this with weekend, holiday, and peak season pricing without even thinking about it. If you’re a campground, it makes sense to raise your rates around holidays like the 4th of July, Labor Day, or Memorial Day. You have more guests and you’re working harder. You deserve that extra income. You can anticipate weekends and holidays, (they’ve been on your calendar all year,) but, what happens with unexpected high-traffic times? Your rooms or sites become significantly more valuable overnight but short notices makes it really difficult to know the best way to adjust the pricing. Here is a short video explaining how Yield Management, a form of dynamic pricing, works.

Just in case you didn’t watch the video, Yield Management techniques, already integrated into ResNexus, work like this:
  1. You have an unexpected spike in reservations.
  2. ResNexus’ Yield Management feature automatically increases your rates when you’re a certain percentage filled.
  3. Your rooms were more valuable because they were scarce, and those last few guests are willing to pay for that lucky “last one.” You’re more stressed and busy, but it balances out.
Or
  1. It’s a really slow season. Maybe you just experienced a hurricane.
  2. ResNexus’ Yield Management feature automatically decreases your rates when you’re below a certain percentage occupancy.
  3. Those lucky guests get a deal and you make more than you would if you had no guests at all. Or they get a deal because they are booking way in advance before the next eclipse, rather than the week of. You get less stressed because you can plan ahead.
At first, like many innkeepers, Kim didn’t want to adjust her rates like this. She saw it as overly aggressive by cheating customers out of a few dollars and pushing them away just for a little extra money. The idea behind yield management isn’t about charging people unreasonable prices or taking advantage of bad situations. Yield management maximizes your profitability while still giving guests a reasonable price for their stay with you. As stated in the video, if Kim and Eric price too low, they sell out too easily. If they price too high, they don’t sell enough. The sweet spot is where they can have vacancy while still hitting the profit necessary to cover costs. Because Kim and Eric used yield management, they earned some extra money, but they also had a full inn on the day of the eclipse. During last year alone, yield management through ResNexus brought some properties as much as $10,000 EXTRA profit. They did it by increasing room rates by small amounts when their property was at a higher occupancy. If they stayed full, the extra amount stayed. If they dropped in occupancy, the extra dropped off without hurting the profits. This also gave them a better idea of where they could set their rates for the next year. If you aren’t already using yield management on top of your dynamic pricing tools, check it out and see how you can add a couple of extra zeros to your bank statement with no hassle.
Ar-themes Logo

ResNexus

ResNexus is professional-grade, property management software for any business operating a reservation system. If you rent, lease or schedule business assets, ResNexus can help you run your business effectively.

No comments:

Post a Comment

Try ResNexus Risk-Free for 60 days.