It’s a good question, but remember this… as an industry, we have survived equally (or even more) challenging market dynamics than this, just in the last five years. COVID taught us many important lessons about how to survive (and even thrive) amid weakened market conditions, which can be applied today to ensure your property emerges on the other side of this challenge stronger and more profitable than ever.
Here are six tried-and-tested revenue management strategies that will protect your long-term profitability, no matter how the market changes over the coming months.
Shorten your forecasting horizon to optimize for more bookings
Obviously, it’s almost impossible to make accurate, long-term predictions when the market demand shaping it is unstable; in volatile markets (like today’s), a better solution is to shorten your forecasting horizon and make pricing decisions based on real-time data, rather than on longer-range projections that can’t be trusted. To enable more accurate predictions, hoteliers should evaluate the booking curve on a daily basis within a 14-to-30-day operational window, and track the 60-90 day booking window on a weekly basis.
Daily, monitor your pickup, comparing how many rooms were booked yesterday vs. the same day-of-the-week one week ago, two weeks ago and four weeks ago; this is the early signal that demand is shifting. Alongside pickup, monitor your on-the-books occupancy and ADR for the next 14 days, channel mix (direct vs. OTA share), and watch for any unusual cancellation activity. A good revenue manager should spend about 15 minutes on these checks every morning to ensure that rooms are priced as strategically as possible.
In your weekly checks on the booking pace for the 30-to-90-day window, identify whether demand is pulling forward, pushing back, or staying flat compared to your same-time last year position. On a weekly basis, you should also reassess your segment mix to identify which segments are most profitable, check forward-looking STR or market data, and review whether your length-of-stay restrictions or non-refundable rate splits still make sense.
While these shifts will take a bit more time for your revenue management team to implement, a confident decision made on solid short-term data is going to result in a much stronger ROI than a proactive decision based on hopes and prayers.
BONUS TIP:Â When the booking window shortens, free up your most valuable inventory: the rooms that guests book most frequently. Offer guests that are already booked in these rooms an upgrade to the room types that are selling more slowly (often the more expensive rooms and suites), making it possible for your property to accept more last-minute bookings from guests, maximising revenue opportunities and offering valuable incentives to decrease cancellation rates.
Use facts to guide your pricing decisions
Competitive rate monitoring can carry a hidden risk in volatile markets: when the properties you’re benchmarking against are discounting because of uncertainty or fear, they can cause a cascade effect across the entire comp set, starting a race to the bottom.
Rather than prioritizing competitive analysis as the basis for a pricing decision in a volatile market, ground your rate decisions in your own live booking data, real-time demand signals by segment, and broader market indicators, such as total market data (not individual properties), airline route cancellations and capacity changes, travel advisories, and your own booking curve segmented by guest type. Monitoring your own segment demand is especially important because it allows you to prioritize the most profitable segments, as demand doesn’t always soften uniformly in a given period.
Despite this, some properties made the decision to stick with high rates and five-night minimum stays, only to see bookings stall; others stayed flexible, adjusting availability based on the actual demand, shortening restrictions and letting the market lead the way – and it was these properties that truly profited off the event, earning 86.9% average occupancy and 94.2% Saturday peak with rates above CHF 300.
Be conservative with costs, not with your commercial strategy
When demand weakens, revenue managers should evaluate their commercial spend based on impact rather than cost, so that high-value commercial strategies and activities are protected.
The first and most important commercial cost to protect is revenue management because it is the activity with the highest leverage per dollar spent. This means protecting both your revenue management team and your RMS, because together they form the foundation of every commercial decision your property makes.
Today, your RMS is key to your property’s ongoing success, as the cost of leaving revenue on the table compounds when demand is scarce. If you were to cut your RMS to decrease your operational spend, your revenue management team would be forced to handle all tasks manually, severely undermining your pricing accuracy and decreasing profit margins. More importantly, it would be impossible for your team to develop new, innovative ways to drive demand from the more profitable segments, further undermining your profitability, both in the short- and long-term.
The second commercial cost to protect is your direct booking infrastructure (i.e., your website, booking engine, metasearch presence, etc.). In a soft market, every booking you can shift away from a 15-25% OTA commission is margin captured. Cutting costs on these items is undercutting future margin, not eliminating present costs.
The third commercial cost to protect is your most efficient acquisition channels. If your branded, paid search is generating direct bookings at a cost-per-booking below blended OTA commission, that is revenue infrastructure, not marketing spend.
Beyond your commercial costs, the most important operational cost to protect is fixed labor capacity that supports the guest experience. Cutting front desk hours, F&B service quality, or housekeeping standards in a downturn will negatively impact your reviews, repeat bookings, and ancillary spend that compounds once the downturn ends. Instead of looking at your staff as costs, focus on driving ancillary revenue through them to maximize your ROI.
If you need to cut costs somewhere, start with the broad-reach top-of-funnel brand campaigns where attribution is weak, agency retainers without clear performance accountability, and trade-show or event spend that isn’t tied to specific group revenue. All three are the easiest to defer without immediate revenue impact.
Maximize profits in a soft market by sharpening your segmentation strategy
The hotels that emerge from downturns in the strongest position are those that took advantage of slower periods to build a more strategic, intentional demand-generation strategy. To accurately reassess your sales and marketing strategies for future success, ask yourself the following questions:
Which segments are most likely to drive profitable demand going forward?
Which channels carry costs that erode net revenue at scale?
Which guest types generate repeat visits and advocacy that compound over time?
Once you’ve answered these questions, update your revenue management segmentation strategy to target the most profitable segments – and continue to re-evaluate and update your strategy as segment demand and costs shift.
Evaluate groups on total revenue contribution, not room rate
In a weakened group market, many hoteliers instinctively protect ADR to protect revenues; ironically, this decision can often negatively impact profitability because room rate is often the least complete measure of a group’s overall value. A group that books meeting space, commits to an F&B minimum, and fills shoulder nights can generate significantly more net revenue than a higher-rated group with no ancillary spend.
To protect your overall profitability (not just room rate) in a weakened market, always evaluate every inquiry based on total revenue contribution before making a rate decision. Group rates should always be priced dynamically based on real-time based on occupancy forecasts and booking pace. Finally, keep option windows short: holding inventory for tentative business that may never close is one of the quickest ways to lose transient revenue.
In a downturn, the properties that capture the recovery fastest are the ones that never stopped pricing accurately
Properties that have maintained pricing discipline throughout unstable periods are faster to identify the recovery inflection point, faster to increase rates, and better positioned to capture higher-value demand before the market fully reprices.
As you can see, the hoteliers who come out of volatile markets strongest are the ones who prioritize strategy over action, and have clarity to make deliberate decisions, only when they have accurate data signals to support them.
In moments of uncertainty, remind yourself that, like in the past, the market will recover. The most important question is whether your pricing strategy will be in good enough shape to capitalize on it when it does. The actions you take today will answer that question.
