Exclusive Feature: It isn’t every day that a super event, such as the Olympics, World Cup or Super Bowl, comes to town: For those hoteliers fortunate enough to be in the vicinity of a super event, unique opportunities exist to capitalise on increased demand, gain a new loyal following of customers and maximise significant revenue opportunities.

However, while super events offer huge potential rewards, if not executed well, they can be high risk and result in anything from displacing current loyal customers to struggling to fill last minute availability due to cancellations.

To maximise profit opportunities from super events, hoteliers should consider a wide variety of factors, including effective marketing and sales strategies, pricing, forecasting as well as restrictions that may or may not be enforced. How can hoteliers in the APAC region best prepare for the next super event? Below are three possible approaches: a basic, better and best-practice way to execute super-event revenue management.

The basic approach:

The first step in forming an effective super-event strategy is to start with some research. Learn the duration of the event and how long guests may want to stay. Next, look at how demand will be affected in the days preceding or following the event. For example, during the 2014 Brazilian World Cup, each town hosting significant matches needed to focus not only on the day of the match, but also the days preceding. If the World Cup Final was to be held on a Saturday night in São Paulo, hotel owners and managers in that city needed to pay particular attention to demand in the days leading up to the match, starting as early as Wednesday and potentially even earlier if guest origin was from a longer-haul location.

The better approach:

A hotel cannot properly prepare for a super event without an accurate forecast. Advanced revenue management software can illustrate what will happen to occupancy levels and booking paces at different price points, across different segments, and the impact this will have on revenue optimisation. The ability to forecast likely business by segment will highlight the most valuable customers to target. Knowing which customer segments to go after will inform strategies to increase ancillary revenues and highlight opportunities for upselling rooms. For example, during a major participatory event like the Tokyo Marathon, a hotel may want to create room packages that include a post-event massage.

The pricing strategies in the lead-up to a super event will have to be carefully managed, and the focus should be placed on maximising revenue per available room, in line with the forecast. While an expected increase in demand on significant event days will allow rates to be driven up accordingly, this will not be the case on less significant days. During busy days, a hotel can look to close out all lower rated segments if required, as well as sell room types as premiums, limit free upgrades and make the most of any upselling opportunities. However, on lower demand days, these restrictions should be relaxed so as not to discourage potential customers from booking with the hotel.

The best approach:

Super events deliver a large influx of guests, including last-minute bookings, so it is critical that hoteliers have the appropriate overbooking strategies in place. While hoteliers traditionally use overbooking strategies to counteract last-minute cancellations, super events deliver substantial numbers of potential new hotel guests and generally fewer cancellations from tighter booking terms and conditions. This means that hoteliers need to be careful with the overbookings they take; otherwise they will be forced to send a potential new guest to a partner or competing hotel. This will result in either a disgruntled potential ongoing hotel guest, because they didn’t get to stay in the hotel they booked, or worse, a guest who enjoyed their stay in another hotel and may become a repeat customer of your competitor.

For hotels with function and event space, it is wise to set premium food and beverage minimums for any groups wishing to block space. For super events with a large corporate audience like the Super Bowl, it’s an opportunity for companies to impress clients, so it is not uncommon for hotels and restaurants to be completely bought out by a company, and these groups are usually willing to pay top dollar for the right facility to entertain their guests. When setting minimums, keep in mind the location (proximity to the stadium, satellite events, the media centre and the airport), the usability of the space, food and beverage pricing and a variety of other inputs to ensure you are not leaving any money on the table.

Hoteliers should also factor the total value and profitability of any group opportunities and weigh that against transient demand. Keep in mind that it doesn’t take much food and beverage to exceed the revenue and profit generated from an individual traveller.

Setting controls on length of stay and mitigating risks are key strategies for hoteliers preparing for a super event. To minimise the impact of costly, last-minute cancellations, hoteliers can implement a system of phased pre-payment restrictions and cancellation period policies should be tightened. For instance, if the current cancellation period is 24 hours, it could be changed to 72 hours or even as far out as seven days. These terms and conditions should be clearly stated at the time of booking. If a large number of cancellations are expected over the course of an event, pre-payment plans will allow hoteliers to recoup a large slice of their potentially lost profits, which will then be complemented by last-minute fill-ins within the seven days leading up to the event.

Historical hotel booking data indicates that the greatest lengths of stays are booked over thirty days out from the event. However, what makes super events unique is that a hotel may not know the primary feeder markets until just before the actual event. For sporting events like the World Cup, the Super Bowl or India’s own IPL, most people aren’t going to pre-pay for rooms and buy airline tickets until they are sure their team is going to be there. For this reason, a hotel should prepare for a demand spike the day of the semi-finals when the two final teams are determined.

Understandably, the longer length-of-stay demand for these transient travellers (super fans) is booked during this demand spike. The closer you get to arrival, the length of stay decreases, but these shorter stay guests are willing to pay a premium. The trick is to capture the best length-of-stay reservations quickly, and that sometimes means sacrificing a little rate.

During the lead-up to a super event, hoteliers also need to review their strategy at set intervals, so any necessary tweaks can be made as required. By understanding the implications of various “what if” scenarios, through forecasting undertaken at the planning stage, hoteliers will be able to make changes to pricing, restrictions and segmentation strategies accordingly as the event approaches.

Following the completion of any super event, hoteliers need to review what worked and what didn’t, and from this data, look at how improvements can be made for any future large-scale influx of guests. Hoteliers need to review the effectiveness of their pricing strategies, the rigidity of their terms and conditions, customer feedback and the likelihood of return customers. These learnings can shape future strategies and help identify long-term opportunities for the hotel.

This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.

Rachel Grier is Managing Director Asia Pacific for IDeaS Revenue Solutions - A SAS Company

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