By Varun Dewan, Founder and Commercial Director of Profitable Rooms
Hotels’ pricing is a widely used measure to measure a market’s demand and prevailing supply situation and which one is weighing in.
Taking this in the context of the hospitality business in the Maldives, our research examines the prevailing rates trends and hotel availability across this popular beach and luxury holiday destination.
On room availability on third party websites, we noticed that the increase in supply coincides with month ends. This looks like a decision that lacks the resolve and has been applied in the absence of a definitive direction.
As per this report, collated by OTA Insight, the end of April saw a room availability jump from 22.73% to 42.05% with nominal fluctuations during the course of the month leading to 48.86% by the 1st of June. This number jumps to 91%, beginning of July. This increases further to 93.18% by the 12th of July. These price trends are fluid and a combination of the current restrictions clubbed with an optimistic outlook a few months into the future and will have to be tracked closely. The reason for that is simple, the lockdowns will be followed either by cautious optimism or revenge vacations and in both cases, the market needs to indicate the world is back to normal. After having stayed at home, people will spend more time researching the offers and options and you have a beautiful opportunity to change your packages to suit that segment.
In the other image, you can also see that the prices have been changed downward between 0 to 20%. These indicate that the market’s ability to pay will take a serious beating and that has already been factored in the pricing. Discounting is not the best strategy and is a quick race to the bottom so you must factor them but not necessarily discount to the same degree. your rate positioning will test you and every decision to lowering prices in the market will tempt you to follow but that does not lead to profitability and as a revenue manager you already knew that.
About the author: Varun Dewan is the Founder & Commercial Director of ProfitableRooms. He has been working with hotels/resorts in revenue management and to increase profitability.
