Revenue management strategies to deal with COVID-19 Part 2

Following on from last week’s blog post ‘Revenue Management strategies to deal with COVID-19, we have devised some more strategies on how to manage hotel closures, what to do about an increased amount of cancellations and what policies OTAs have enforced in the midst of the COVID-19 pandemic.

ENEWS-COVID-03-23-20-REITS-Hersha-.jpgManaging Closure:
Be prepared for guests to be phoning direct to ask for advice and support, this is the time to keep reservations staff on and well briefed about closure, how to cancel or re-book reservations. Whilst many of the conversations at this time will be regarding cancellations, this is still a great time to ask to stay in touch and build relationships.

· Ensure reservations staff stick to government guidelines when communicating to guests.

· UKHospitality is a good source of up to date briefings on government policy as it unfolds.

· For hotels that want to offer rooms the Government is maintaining a central booking system for hotels willing to accommodate NHS staff. If you wish to volunteer your premises to support the national effort to tackle the virus then please do contact UKHospitality at policy@ukhospitality.org.uk

· Keep an eye on whether hotel rooms may be needed to support patients that are coming out of hospital but need to be on quarantine.  The UK has not yet reached that stage but there may be contingency plans you can put in place should the opportunity arise

· Ensure sales teams maintain relationships with key accounts, and keep the communication going; situations change daily and for those that require hotel accommodation throughout this period ongoing communications will be key.

When should I start accepting reservations after closure?

The UK government as of today (24th March) is still talking about a “12 week window”. However, looking across to Italy and Spain and their tough measures on travel, for example Spain extending confinement for a further two weeks to April 11th, and adding some realism to this, where hotels have closed, we are discussing re-opening dates with flexible inventory levels from mid-May for city hotels to early-mid June for hotels that are regional with limited to no corporate business. 

Managing staff on Furlough or WFH (Working from Home)

Keep communicating with staff when they are at home on furlough. Many chose this profession because its people facing so will find time at home and being isolated particularly difficult. Keep regular team meetings going – ideally by video call. See here for some suggestions on how to support team members.

· Please see government advisories regarding reclaiming salaries for staff.

How do I keep what future business I have?

That’s a tough one - we are now starting to see more cancellations (in the UK) further out, towards May and into June, as guests become less confident about travel windows, and our hotels are now showing minimal pick up for the next 30 days, clearly with cancellations outpacing new reservations.

· For leisure destinations we are seeing pick up in the summer - and on non-refundable rates but we are reviewing the use of these daily since travel behaviours may have to change in the light of managing re-infection.

· It’s important to balance out the current strategies of OTAs on cancellation policies with what your property needs in the future. For many of us, dealing with closure is top of mind right now, but bear in mind that the principle of flexible vs non-refundable rates is to share the risk of a guest not showing up. If the hotel wants to take that risk, then offer a fully cancellable rate up to day of arrival. If the hotel wants the guest to take on some of the risk of not showing up then, when the time is right, protect the inventory and gain commitment from the guest to stay through deposits or prepayment. 

Here is a round up of things to know about cancellations now:

1. Expedia has consulted with hotels regarding their roll out of the Global Cancelation Waiver Program – this program allows guests to cancel and claim a refund for non-refundable prepaid bookings made prior to March for stays between March 20th and April 30th 2020. Every property with outstanding non refundable pre-paid bookings between those stay dates is automatically enrolled to this program. Expedia does not earn compensation on these cancelled bookings. Hoteliers had until midnight PST on Friday, March 20, to opt out of the program. It’s likely that this stay date horizon may be reviewed. Hotels that participate will benefit from additional boosts to exposure over the next 12 months.

2. Booking.com has not been quite as communicative as Expedia with hotels on its policy regarding management of refunds for Non-Ref bookings, they declared Force Majeure through their web site, last week - which was a surprise to many - with the result as follows:

We expect partners to refund any prepayment and waive any cancellation costs (fees, expenses and/or other amounts) in situations where the guests/travellers requested cancellations as a result of Force Majeure. Booking.com will waive the commission in these cases.

· Stay dates where this applies vary per region
· For EMEA as at 20th March it was as follows: Reservations with a check-in between 20 March 2020 and 13 April 2020. This changes daily so check the extranet.
· Note: we couldn’t find any restrictions that applied specifically to guests visiting the UK, so please check with your Booking.com account manager regarding the specific situation.

3. In support of giving guests flexibility, Expedia has also announced on their extranets, that Expedia group web sites have stopped displaying non-refundable rates for booking windows between 3- 60 days, this is a temporary measure “which allows travellers to the flexibility to respond to ongoing changes resulting from COVID-19”.

· If you have a significant number of pre-paid rates then this affects you. Check whether you are visible on Expedia over the next 60 days now.
· This is particularly relevant for the serviced apartment community and leisure hotels where full prepayment is a frequent requirement, so all rates need to be re-loaded as flexible if you require visibility.
· We have noticed that this policy applies to no-shows where the criteria were met. Also, it’s not possible to re-book these reservations for a client to another date - they are automatically cancelled.

4. Pre-paid rates remain a key booking choice for many hotels and apartments, particularly for offers, so the ongoing policies of OTAs to deal with pre-paid rates in this manner needs to be monitored, particularly when thinking about seasonal offers, so consider softening up all future rates and adding back required restrictions in the future if you need to.

· For an idea about what other hotels are doing in terms of cancellation policies please follow this link.

Green shoots? 
If you want an idea of how long this lasts when comparing to other countries, Adara provider of travel data and intelligence shows inbound travel to China, showing some green shoots of recovery - see here.