1 Identify

Frequency: Daily

A simple procedure to start each day is examining recent booking activity and the pace at which bookings are coming in. This helps you identify what rates reservations are actualizing and note potential areas for improvement. You can use a reservations list, either from your Revenue Management Software (RMS) or Property Management Software (PMS), sorted by Reservation Date or Booked Date with the most recent sales brought to the top.

See this example below where I’ve sorted by Reservation Date to bring the most recent sales to the top of the list. The stay dates can vary for these reservations but in the below example we mostly see reservations for the months of October and November.

The benefit to using a reservation list is that you can see a comprehensive list of bookings, with the listing names, dates of stay, and revenue associated with each booking. The downside is that visualization of current Occupancy (Occ.) and Revenue for all dates within your calendar is limited. Utilizing a reservations list is a great way to scan for red flags or items to investigate, such as lower than expected ADR, far out stay dates, or length of stays lower than your required minimums.

Using a reservations list is a basic practice that can lead to a Revenue Manager adjusting some areas for improvement but is not scalable for intervention of key date ranges, especially for portfolios of a larger size. Next we discuss an approach that will allow visibility across your whole calendar.

Frequency: ~2 times a week

Suggested schedule: Monday and Wednesday

Using charts to visualize Booked Nights, Occupancy, and Average Daily Rate (ADR), is ideal for identification of compression periods (i.e., times of high demand) and areas of need (e.g., occupancy is low or rates are too high). Utilizing charts with Booked Nights (or Occupancy) on the daily level with ADR overlaid on top can be a simple and practical method of identifying dates to take action on. In the below image, the bars are Booked Nights which represent the number of listings booked on any given day and the dashed line represents the Average Daily Rate (ADR) on any given day for the group of listings selected.

Don’t have a RMS? No problem. You can create the below visualizations with various other programs (e.g., Excel, Google Sheets, Power BI, or Tableau). Here is a template in Google sheets you can use to get started. Just make a copy and import your own reservation data. Just a warning, this path does take a good understanding of Google Sheets/Excel formulas and a bit of effort! As most Revenue Managers know, almost anything can be built using Google Sheets or Excel, with a bit of elbow grease.

A simple maxim to remember when using a daily occupancy chart is “Peaks and Valleys”. In the example above, we can clearly see peaks of occupancy around the end of November and the end of December (Thanksgiving, Christmas, and New Years, respectively). These are time periods of known holidays where compression occurs. This also means that the revenue potential is high for these dates. While higher rates are an obvious choice for these periods, the most crucial goal is rate optimization, especially with a larger amount of inventory to sell. Ideally we’d want to continue to see sales occurring during both these time periods, so rates need to be adjusted in order to continue pacing towards a sellout. This means we want to not only consider the number of bookings occurring but also at what pace the bookings have been occurring, which we’ll discuss more below under “Example of Pacing Analysis”.

Understanding the common shapes that the above chart can take will help you more quickly synthesize the health of your portfolio. Below are a few of the most common shapes that the daily occupancy/booked nights chart can take. These are conceptual shapes that can have a direct impact on what actions you should take.

Keep in mind that the overall number of listings and actual occupancy numbers can be independent of the below shapes. You can have high “peaks” in occupancy, which indicate high demand days and often sellouts, but the rest of your calendar can have low occupancy which is a concern. It is also good to note that you will often see a combination of these shapes throughout your calendar! 

Considering the pacing of bookings is incredibly important during this process. Let’s use the above example on the daily occupancy chart with Thanksgiving and Christmas/NYE. 

Frequency: ~2 times a week

We will discuss this matrix in depth in the next chapter but for now we can use one example as a method of Identifying dates for Intervention. A simple concept to use for specific date ranges (e.g., holidays/events, entire months, or particular seasons) is to compare your ADR and Occupancy (i.e., aggregated by segments like bedroom count or property type) for this current year to the Same Time Last Year (STLY) and use the below matrix to decide whether to intervene.

Take the below example of 54 properties for November 1st - 17th. The pink indicates this year and the green indicates STLY. The bars are Occupancy and the Dashed lines are ADR.

There are a few ranges in which intervention may be necessary but the most apparent are November 15th - 17th. The Occupancy for these days is much higher than STLY and much higher than any other dates in the first half of November. The ADR is also higher than STLY but mostly due to no bookings having occurred at this STLY. Using the above matrix (i.e., Current ADR and Occ. above STLY), one may opt to increase rate position for this segment of properties. In this situation I may opt to not push rates too aggressively since these dates are about 45 days away.

Before taking action on any key date ranges you should also consider a few details:

Lead time

How far away the dates in question are is incredibly important. Your property types, seasonality, and market all play a factor in what booking windows will look like. A good rule of thumb is the closer the dates the riskier it is to push for higher ADR.

Change in Revenue Management tactics, strategies, or team

Any significant adjustments to overall strategies or even the RM team itself need to be considered when looking at STLY data. For example, if a previous team or team member held rates extremely high but heavily discounted within the last minute this would artificially create shorter lead times.

Group bookings in the previous year or current year

Group bookings may not be recurring and could be skewing the Occupancy for either year. 

Non-recurring Event or Moved Event

Consider possible non-recurring events or whether the event has shifted dates this year.

Significant Portfolio Expansion

Understanding how inventory changes affect STLY comparisons is crucial. If one type of inventory within your portfolio has grown significantly (i.e., your team has acquired a significant number of 4+ bedroom listings) then one could expect changes in both ADR and Occupancy metrics from year to year.

After these considerations are made, the matrix above can guide your focus to specific areas of need. In the next chapter we discuss each of the four situations that can occur from this matrix (e.g., ADR below STLY & Occ. below STLY, etc).

Frequency: ~2 times a week

Suggested schedule: Early in the week and later in the week

Using charts and tables is always ideal when looking for areas of intervention, due to the concise and informative view they provide, but sometimes it is necessary to scan the calendar for areas of opportunity. Regularly examining your calendar can highlight dates for manual pricing or minimum length of stay (MLoS) interventions. Furthermore, for larger portfolios it is ideal to use a Tape Chart or Multi-calendar.

Here are a few key areas to look for intervention on the calendar:

Check that your bookable rates align with current market conditions and demand. Utilizing Comp sets is a helpful way to understand ideal rate positions for a listing, especially new listings.

Look for opportunities to increase rates during high-demand periods. Using the above Daily Occupancy or Booked Nights Chart process to look for “Peaks” that are pacing well and then adjusting on the calendar as needed.

Consider lowering rates for low-demand periods to increase production of bookings. Using the above Daily Occupancy or Booked Nights Chart process to look for “Valleys” that are not pacing well and then adjusting on the calendar as needed.

A common practice in the low season is to monitor Min. Rate restrictions, which can often be set high by  property owner’s requests, and look to lower these if possible. Your RMS, such as Wheelhouse, may have options for bulk adjustments to these rates.

Review any blocked dates and assess with your team if they're still necessary.

Communicating with your reservations and operations team regarding blocks is a vitally important task as a Revenue Manager. Shortening unnecessary blocks or even removing them completely allows for more nights to be sold, which in turn will yield higher revenue for your company.

Identify any gaps between bookings. Depending on the size of gap and days of week impacted there might be opportunity to be had with a change to minimum length of stay (MLoS), Check-in/Check-out restrictions, or pricing adjustments. Consider strategies to fill these gaps, such as: Offering discounts for extended stays, Adjusting MLoS restrictions, Promoting reservation extensions to guests on either side of the gap

A few considerations for gap night adjustments:

Seasonality

During high season you may not want to lower your MLoS restrictions to the bare minimum but opt to keep them higher due to the higher number of consumers booking for those dates and thus higher likelihood of booking. Using time-based rules to drop the MLoS requirements within a shorter window is a good option as well.

Days of Week

Considering the demand for days of the week within your market is important when deciding on adjustments to MLoS or rates for gap nights. Some markets or even property types have a higher likelihood to book Thursdays, for example, which would mean one could opt to not be as aggressive with rate cuts or MLoS changes than they would in a different market.

Holidays/events

If dates fall within an event or holiday you’ll want to take this into consideration similarly to high Season or higher demand weekdays.

A few examples

Split weekends (e.g., Saturday is sold but Friday is not) which create “one-sided gap” situations are common areas to look for on your calendar. Adjusting Min. Stay restrictions for these nights can allow for more opportunity to sell. Depending on your operations team’s bandwidth, you may consider lowering the Min. Stay requirements for these nights all the way to 1 night.

Even if a length of stay of 1 night isn’t doable, it is still best practice to lower a weekend night to cast a wider net of booking options for consumers. If your standard minimum length of stay (MLoS) requirement is 3 nights then you could drop to 2 nights for a split weekend.

The below example shows a listing with a 4 night gap but a MLoS set to 7 nights. Currently, those night are unsellable and the minimum stay requirements will need to be adjusted. By setting the MLoS to 4 nights there is only one option to obtain a reservation but if I choose as low 2 nights, I have now allowed guests to book six ways within the gap (i.e., the full 4 nights, 3 nights starting on the 20th or 21st, or 2 nights on the 20th, 21st, or 22nd).

Remember, consider your seasonality, events, or even days of week impacted. In high season, I may opt to drop the MLoS to 3 instead of down to 2, for example. Operational considerations like cleaning staff bandwidth are other factors you should consider when changing LoS.

Scanning the calendar to take action on specific dates is a tedious manner, especially for portfolios of a larger size. The more you do this practice the better you will be become at recognizing blocks, gaps, or even prices that look “incorrect”. 

If you find yourself consistently making similar changes, like adjusting Min. Stay restrictions for gap nights, decreasing rates within the short term window, or decreasing rates before or after a checkout, then it is always a good recommendation to try to automate these processes. Anyone who has scanned their calendar for gap night adjustments understands the value in automation. The benefit to using a Dynamic Pricing solution or RMS is that many of these basic tasks can be automated (e.g., Last minute discounts or automated gap night filling).

Frequency: ~2 times a week

Suggested schedule: Monday and Wednesday

Pay close attention to upcoming dates with unsold inventory, especially as they approach the typical booking window. Holding rate positions too high for dates that are fast approaching is a higher risk strategy that overtime will yield lower revenue. The window of time for expiring inventory can vary by property type (i.e., a 1 bedroom condo typically has a shorter window than a 5 bedroom home) or by market. Typically the expiring inventory window can vary anywhere from 1-8 weeks in time. Ultimately, the pacing of your own bookings is what really should guide your judgment here. You should aim for a steady flow of bookings (i.e., think of a faucet that isn’t trickling but also not a fire hose that is rushing water!) as time passes.

In the above chart we observe daily booked nights for upcoming dates in my portfolio. Let’s assume I have 160 listings to sell. My goal would be to observe the pacing week over week to ensure my booking pacing trends towards that cap of 160 nights to sell.

Understand the typical booking patterns and seasonality for your market. This will guide when and by how much you will need to cut your rate positions. For example, low season dates that are close approaching are riskier to apply premiums to than high season dates that are close approaching or increasing rates for a studio apartment in downtown Boston within 7 days to arrival is probably less risky than increasing rates for a 10 bedroom home in a rural non-drive to market within 7 days to arrival.

Identify dates approaching the end of the typical booking window with low occupancy.

Review your rates for expiring inventory dates to ensure they are competitive.

Consider adjusting rates to stimulate bookings. If demand is low, consider lowering rates or offering promotions (i.e., on OTA Channels or via your direct booking site). If demand is high, ensure your rates are optimized to capture maximum value.

Consider lowering Min. Stay restrictions for dates in the expiring inventory window.

Automated Time-based rules via your RMS can help alleviate the need for consistent manual intervention.

Frequency: Monthly

Regularly assess your property's performance against various segments of data, including STLY data, market data, or even current pacing data, to identify areas for improvement. Benchmarking your current rate position for upcoming dates against market, neighborhood, or specific competitors is also beneficial to identifying areas of intervention.

Compare your property’s or properties’ performance to similar properties in the area (i.e., Comp Sets), market areas, or even smaller sub-market areas.

Three of the most helpful metrics when Benchmarking performance against other properties':

Notice in the below chart how the listings in my portfolio (shaded green) have much wider range of pricing (i.e., lower lows and higher highs) than my competitors (shaded pink). To further understand how this may impact performance I would investigate the Occupancy for this group of listings to know if my pricing is well optimized. If the listings that are priced at the upper range of my portfolio have lower Occupancy then I may need to adjust overall rate positions, most likely via a Base Price setting. Similarly, if my listings at the lower end of the price range have consistently higher Occupancy than my comp set I may decide to raise the overall rate positions.

In the below chart, we can observe my listings (shaded green) have outperformed my comp set (shaded pink) in regards to Occupancy during the high season with the exception of September. To understand the full picture I need to also check how the ADRs compare between these two sets.

Looking at the ADR comparisons below, we can see that during July-September my listings either performed about on par (July) or better (August and September) than my comp set. This indicates that my strategy may have been more optimized during July and August because the Occupancy during these months was higher for my properties. This shows I may not have optimized my strategy in September due to the Occupancy being lower but ADR being higher.

• Revenue Per Available Room (RevPAR)

RevPAR is technically captured in the above 3 most important KPIs (i.e., RevPAR = ADR*Occ.) but analyzing this metric as its own line is incredibly helpful, especially after dates have already past.

• Lead times
• Total Revenue

Frequency: At a minimum to be done after leaving high season

Regularly conduct a "post mortem" analysis of past performance to inform future strategies. This could be done shortly after leaving a high season or high demand event dates in order to prepare rates and strategy for the next high season or event. Your aim should be to analyze what worked well and what didn't.

• Did we achieve our revenue goals?
• Were our pricing strategies effective?
• How did we perform compared to our competitors?
• Were there any missed opportunities?

Easy points to check here are whether you missed the mark on ADR, Occupancy, or both! Use insights gained to refine your revenue management strategies going forward.

By consistently following these active revenue management practices, you'll be well-positioned to identify and capitalize on opportunities to increase revenue, while also addressing potential issues before they impact your portfolio’s performance. Next, we’ll discuss taking action on areas once they are identified.