One of the main factors that affect the effectiveness of the revenue management is the rate of cancellations and its impact on the occupancy of the hotel.
In order to improve the financial results of the hotel, the revenue manager needs to be able to reduce the percentage of cancellations and re-sell the cancelled rooms. That means that you need to have a thorough understanding of your guests’ behavior in terms of cancellation probability, to create the best balance between non-refundable and flexible reservations and to develop the last-minute offers which will fill the empty rooms without having a negative impact on the hotel’s revenue.
There are several characteristics that fluctuate the importance of the cancellations for the hotel’s revenue. The size of the hotel, its booking window, the average length of stay, the competition and the clientele have a significant effect on the hotel’s dependency to its cancellation rate. A last-minute cancellation has a huge negative impact for a 10-rooms hotel in a summer resort, while for a 300-rooms city hotel the impact is almost imperceptible.
Having the right software to help you get the most informative decisions regarding the cancellations’ management is essential.
In order to decide which is the best balance between the flexible and then non-refundable reservations, you need to have a complete image of your guests’ probability to proceed to a cancellation. Which is the percentage of couples that cancel and how long before do they make the cancellation? How probable is it for a reservation through Booking.com to be cancelled? Which is the cancellation rate for every rateplan and length of stay? If I make an offer to reduce my cancellation rate will that have a positive effect on my overall revenue?
Bookwize provides a bunch of Business Intelligence Reports that help you track all these dimensions and decide which is the best revenue management strategy in terms of the cancellation rates. Contact Bookwize’s support team and explore all the features that help you reduce your hotel’s cancellation rate.