Whenever a special event takes place I get excited thinking about how I would manage it if I were sitting in the shoes of a revenue manager. FIFA is no exception. I had a lot of thoughts about it, especially when I learned that Montreal wouldn’t be included in the tournament. Understanding that June is historically a busy month in Montreal with the F1 Grand Prix, I assumed that the city did not need the additional crowds from FIFA when the bid was made. But why would you say no to business? Well…
When you think about how the FIFA tournament is set up, it’s not like there were multiple games in a row in one city. They were taking place all over the continent over a period of 6 weeks. So what does that mean for the revenue manager? How do you know what price to set your rooms at? How do you know if restrictions will help or hinder performance? Hind sight is 20/20. So let’s look back on it with that vision.
To do a quick analysis, I looked at Costar data for the day before, the day of and the day after games in Dallas, LA, Seattle and New York. Where reasonable, I looked at the submarket near the stadium to try to isolate the impact from the games, but this isn’t an exact science. It was pretty clear from the numbers that Dallas saw the greatest growth of the four cities I looked at, but I wasn’t that surprised. Occupancy levels were lower than the other cities in general, so the growth numbers were more impressive. In Seattle, for example, some of the dates actually saw negative revenue growth because of a drop in occupancy year-on-year. With this information, I would say that ADR was the main driver of revenue growth for these dates. FIFA travellers may have been prepared to pay these rates, however it may have alienated other business for the same dates. When taking on an event like this, I think it is important to look at your typical business mix for the time frame and understand how much you want to displace by the event, and if it will be worthwhile for you.
Another thing I noticed quickly is that the night before the game saw growth, the night of the game saw growth, but the night after the game was always met with slower growth or sometimes even a drop compared to last year. Protecting the third night would be something to try in the future for an event like this, but a minimum stay restriction of 3 nights may deter people from booking. Perhaps a promotion along the lines of stay 2 nights and save X% on the 3rd night would be a good way to incentivize guests to stick around a bit longer and contribute to higher ancillary revenues for the hotel.
Finally, I don’t believe that all the teams drew the same crowds, but that is just based on anecdotal evidence. We heard of the Scots taking over Boston, but I don’t know if the fans from Curaçao made as much of an impact on the cities they visited. I would imagine that looking at the schedule and understanding the demand for the specific games in your host city would help to decide on the pricing strategies.
And as always, when events like this happen, traditional models can struggle to predict the demand and adjust quickly enough to shifts in it. For example, knowing your city is hosting a game on a specific date was valuable information, but until the who would be playing where was announced it would be hard to assume what the demand would be. It’s all well and good to try to play with restrictions and pricing to maximize your profits, but if the market isn’t also doing so, you may fall behind. Pricing based on current market dynamics is the safer bet for events like FIFA when historical data is not representative of the future. Reach out today to learn how Rate Yield’s algorithm is always ahead of the game!
