Special events come in all shapes and sizes. Whether it is an annual event that takes place in the same city, one that moves to different cities and dates, one that spans several nights or one that has multiple recurrences in a short time period, Revenue Managers around the world are working to maximize the potential revenues of each. Typically these strategies combine restrictions and increased rates to achieve the goal. Some of the actions taken will be the same for any kind of compression event, while others will be specific to the event. To illustrate this, allow me to share three examples of events and best practices for each.
F1 Grand Prix Montreal:
As a Montrealer, I first learned of the Grand Prix when I was about 6 years old and I would collect empty cans and bottles around the sites of my grandparents’ RV resort. It was pretty clear to me that I made a lot more money on cans that weekend than any other weekend in the summer. When I grew up and I was working as a market manager at Expedia, it was abundantly obvious that my can deposits were a drop in the bucket for how much money the Grand Prix brought into the city.
Some things to note about Grand Prix for readers not aware of the weekend-long races:
The event occurs every year in June on almost the same weekend. The dates are announced about a year in advance.
The main event takes place on Sunday but there are practice and qualifying races on Friday and Saturday as well.
There is a large amount of business that comes from groups.
Weekends in June tend to be protected with either black out dates or high rates and minimum four-night stay restrictions as soon as inventory is loaded. Because the date of the race can change from year to year, revenue managers in Montreal are very protective until the dates are finally announced. Before the dates are official, it is possible to prepare for the event. Some things that revenue managers and sales managers will want to do is consider the last 5 years and determine the goals for this years’ iteration. Understanding which groups can be confirmed ahead of time will help direct the market segmentation and strategies of the hotel.It is also imperative to plan for a book direct strategy to obtain the highest possible margins. Perhaps this would be done by closing out inventory on other channels or by imposing more severe restrictions on different channels.
Once the dates have been announced, we see most hotels selling at rates approximately twice as high as their normal sell rate. Additionally, we see minimum length of stay restrictions of 4 nights across the 4 nights (Thursday-Sunday). Oftentimes we will also see closed to arrival and closed to departure restrictions in place on Saturday night.
Understanding that people that are booking a year in advance, or even 6 months in advance, are most likely visiting Montreal to attend the Grand Prix, it makes sense to protect your inventory in this way from the start. That being said, as the time goes on, it is important to have regular verification and monitoring in place to be sure you are on pace to attain your objectives.
One of the most common blunders we see is the maintenance of restrictions for too long, to the detriment of business. Thursday is not actually a day when races take place. Imposing a minimum stay restriction on Thursday can prevent a hotel from selling a room on Tuesday, Wednesday & Thursday night. To ensure minimal impact on shoulder dates, it would be wise to revise the restrictions in place on Thursday after the initial wave of reservations is made. Same goes for Sunday night when many people may be interested in heading home after a big weekend.
The last best practice of note for the Grand Prix is to dare to be different. If every hotel in the city is selling for a minimum of 4 nights, your hotel could be the only option for a one-night stay, which would result in a significantly higher rate due to low supply. Similarly, if every hotel is only offering non-refundable rates, implementing a flexible cancellation policy could help your hotel to have a leg up in the shopping process. For example, offering free cancellation up to 30 days prior to arrival and charging 50% between 30 days and the arrival date, offers the client the flexibility required to confidently book months in advance while also ensuring your ability to resell the room and make money.
Taylor Swift Concerts:
As a Swiftie myself, I’ve been following the Eras Tour and I am not surprised at the superstars ability to sell out stadium after stadium, multiple nights in a row. In each city she visits she performs for a minimum of 2 nights and a maximum of 6 nights. Because we don’t have a large enough stadium in Montreal, I would have to travel to a different city to be able to witness the magic. And this is undoubtedly the case for a significant number of the estimated 11 million ticket holders worldwide.
So what do you do when Taylor Swift announces her concert is coming to your city? Well, increase rates, raise hurdles and manage your distribution channels accordingly, obviously. People who are looking to book rooms have presumably managed to secure tickets to the show, likely at a not insignificant price. Be aware of this as consumers may be more price sensitive on the hotel knowing they won’t be in the room for very long anyway. Monitor what the other hotels in your market are doing and make sure your hotel is priced accordingly.
Avoid putting in place minimum length of stay strategies. While costs are undoubtedly higher to have the full house checked out and in each day, you have an opportunity to sell the room for each night if you are flexible. Use non-refundable rates to position your hotel as more accessible, while maintaining high rates for the flexible option.
Olympics:
With the Olympics happening in Paris this summer, I thought it would be an interesting event to look at as a 3rd compression event. The Olympics span 3 full weeks with different disciplines and events taking place throughout. It is difficult to anticipate the impact on demand based on your own data given that the Olympics take place in a different country every 4 years. Communicating with peers in past host destinations, researching through industry reports and data, and keeping open lines of communication with the organizations hosting the event will help you to be more prepared.
Not all disciplines and events can expect the same level of attendance. As such, hosting the Olympics presents hotels with a time period apart from the norm. Within those three weeks you can expect to have seasonal variation as you would in a typical year, with the exception of a low season. Proximity to the different events and their respective venues will also affect the buyers willingness to pay.
Here are some things to consider when planning out your Olympic Budget:
What events will take place in your vicinity?
What days will they happen?
Are they serial events, like football tournaments, or do the events start and end on the same day?
How much group business have you secured and how dependent will you be on individual travelers?
What are your attrition policies for your groups?
With an event like the Olympics, you certainly don’t want to waste the opportunity of a lifetime. As such, start from a position of audacity. Constantly monitor the performance of each individual date of the 3 week period, and play with restrictions rather than rate if you need to make your property more attractive.
As a final note, I would like to stress the importance of guest experience. If you are selling a room that is typically sold for $200 for $1,000, the least you can do is include a water bottle. Consider ways that you can create an ambiance in your hotel that will improve your guest experience and help them to justify the increased rate they’ve paid.
