The promise of reducing empty rooms via last-minute bookings is nothing new – last minute travel has always been big in Europe, where the close proximity of dozens of relatively inexpensive destinations encouraged many consumers to care less about advance planning in favor of a lower priced getaway.
While the packaged holiday industry has enough flexibility to offer variable inventory at a reduced rate, individual hotels are capacity-limited with relatively fixed rates. Publicly discounting rates – especially at the last-minute – can lead to some undesirable consequences for hotels: upsetting loyal customers, undercutting full-priced rates, and training the customer to wait for last-minute deals.
“Hotel revenue management needs to be managed very carefully so as to avoid conditioning customer expectation toward last minute deals. As with other aspects of the travel lifecycle, there is always a segment of consumer demand that can be leveraged towards higher yield rates, but last minute deals need to be carefully managed in order to prevent revenue dilution. Hotels need to put these deals into context, assessing the relative value of discounted deals for consumers versus the discounted advance booking deals, which are made via higher commission outlets such as hotwire.com or hotels.com,” says Minoo Patel, VP of Mobility and Social Media Practice, NIIT Technologies.
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