Seasonality: Establishing Resort Rate

Which came first, the chicken or the egg?

When establishing Room Rate First you need to define the seasons Peak, Shoulder, or low

then you can easily establish room Rate for each season

What is Seasonality?

Seasonality refers to recurring patterns where demand trends remain predictable over time. Seasons represent periods of stable or fluctuating demand for a property or market, influencing pricing decisions.

Why Define Your Seasons?

Identifying your property's seasons ensures accurate pricing throughout the year, minimizing the chance of missed bookings or setting inappropriate rates. It allows capitalizing on revenue opportunities by adjusting transient rates based on fluctuating occupancy and demand.

How to Define Your Seasons

Use various tools to analyze trends in occupancy and demand. Follow these steps:

Review your latest Market Share Report, focusing on Occupancy, Average Room Rate, and RevPAR graphs comparing your property’s performance against competitors over 18 months.
Identify logical seasonal breaks by marking the graphs with vertical lines.
Assess these lines across all graphs: a) Do Occupancy and Rate trends validate current seasons?
b) Are the Occupancy and Rate trends aligned? If not, why?
c) Do your property’s Occupancy trends match those of competitors?
d) Is there alignment between your property’s and competitors' rate trends?
Based on these insights, you may need to re-define some seasons.
Remember that occupancy does not reflect total demand—analyze transient turndowns for deeper insights.

Data Sources for Turndown Analysis:

Turndown Reports Summary
Demand Report
Transient Turndown Report
Historical Data Seasonality Tool
DaySTAR Reports (or daily competition reports)
Resort Demand Strategy Tool

Important Facts About Seasons:

Seasons can span a few days or an entire year but must be contiguous.

The number of seasons varies by region, market, or property—many use four: Low, Shoulder, High, and Shoulder.

Seasons may differ by segment (e.g., transient vs. group).

Process Overview:

Assess Demand and Price Sensitivity
Review Historical Pricing
Analyze Market Share Performance
Evaluate Competitors
Factor in External Influences

After completing these steps, adjust benchmark rates for transient and group segments. Refer to Resort Pricing Strategy documents for further guidelines.

Manual Input Sections:
External Factors:

List key events affecting demand over the past 5 years and future projections, including holidays, weather, and special events.

Competition:

Identify competitors for each business segment and assess if new competitors impact your positioning.

Determine Season Changes:
Use Historical Demand graphs to pinpoint seasonal transitions (from low to high seasons).
Apply the same process to Price Sensitivity and Market Share graphs.

Competitive Assessment:

If part of a hotel cluster, evaluate each property individually and collectively.
Set and align seasons across segments and sub-segments.

Two Ways to Implement Season Changes:

Through rate adjustments.
By modifying booking strategies (e.g., adjusting Stay for Breakfast offers).

Seasonality Guidelines:

Monitor how demand and price sensitivity indicate season changes.

Analyze transient and group seasonality independently.

Review past pricing decisions for their impact on market share and sensitivity.

Evaluate external factors affecting segment performance—identify recurring events.

Track external influences (e.g., holidays, conventions, or weather shifts) to adjust seasons as needed.

Compare competition—identify strategic moves influencing demand.
Address customer expectations for seasonal pricing adjustments (e.g., post-Easter rate changes).

Review Data Sources Regularly:

Analyze DaySTAR reports, and Competitive shops.
Competitive shops help validate pricing but should not dictate strategies alone.

Cluster Strategy:

When working in a cluster, align seasons for maximum benefit across properties.

Right Number of Seasons:
The number of seasons varies, but simplicity helps maintain rate integrity and eases wholesaler management.

Segment-Specific Seasonality:

Evaluate each segment independently. A hotel with flat year-round occupancy might still exhibit seasonal shifts across groups, wholesale, or transient segments.

Historical Analysis:

Review up to 5 years of data to identify consistent trends. Look for clear patterns in demand and price sensitivity to establish seasons.

Adjusting Seasons:

Consider holidays, school breaks, and group bookings when extending or shortening seasons. Flexibility ensures alignment with market conditions.

Continuous Reassessment:

Re-evaluate seasonality regularly to identify shifts within booking windows. Keep the process dynamic and responsive to market trends.

Customer Expectations:
Understand seasonal customer behavior—different seasons attract different guest profiles (e.g., couples vs. families). Offer appropriate value based on seasonal expectations.

Data Collection Tools:

Property Management System (PMS)
STAR Reports or internal daily computation sheets

Recommendation:

Evaluate seasonality for each segment—Transient, Group, and Contract. Analyzing sub-segments helps uncover drivers of seasonal demand shifts, ensuring effective pricing strategies.

Seasonality Process:

Once defined, implement a re-evaluation system to track shifts in seasonality proactively.

Raising rates as bookings increase:

This type of strategy would have you raising rates as you see roomnight bookings grow. Some people would say that demand is increasing as these booking increase and we need to raise our rates.

This is a common misconception.

It could be that you are just entering your booking window.

The real question regarding demand would be “is there a fundamental increase in demand”?

If the answer is yes, you would increase your projections and potentially pricing as a result.

The goal is to establish your projections and the correct fair market pricing against those projections.

If a hotel is projecting 220 room nights, what is the correct pricing for 220 room nights? Load the rate and maintain the pricing until arrival day.

If demand truly does increase and you take projections up across the whole season (for example, from 220 to 300 rooms), then a review to potentially increase your pricing is warranted. Remember that our customers should be able to explain why they are paying different rates.

Different customers that book non-qualified rates at different times in the booking window should not be paying different rates if it can be helped.

Opportunistic Pricing:

This type of pricing would have you raising rates dramatically when you know a sell-out is imminent and you only have a few rooms left to sell. In this case our customers would not be able to explain why their rates are different. You can achieve the same desired result by selling only premium rooms types as the hotel gets close to sell out. A customer who bought a suite knows why they paid more than the person in a deluxe room

How do we handle leisure pricing during the ramp-up phase of an opening hotel?

The first consideration is whether you are opening in an established or an emerging market/destination (i.e., Orlando Grand Lakes vs. St. Kitts). Then, you can consider whether it makes sense to offer a flat introductory rate that offers considerable value and motivates a customer to action. When offering an introductory rate, ensure you communicate that the rate is “introductory” and is x% off of normal pricing. It is important that all marketing collateral indicates what the normal rate will be to ensure people do not associate the low introductory price with the quality of the location or property. This way people will have an idea of the full value of the property and will not be sticker shocked when the promotion expires.

Seasonality Tool

This tool is to help identify seasonal trends that affect your hotel,
- How these trends may differ across various market segments.
- This tool reviews historic data at the period or month level,
The graphs, Show

-------> Demand,

-------> ADR, and

-------> Rooms Sold, allow you to look back historically by rate code.

-These graphs provide a view of the trends in market performance,

-The ADR and Rooms Sold graphs go back up to three years, t

-Demand graph up to two.

no more than five at a time for clarity's sake -Select which rate codes to view -

-ِ-Adjust the time frame to focus on recent history or to look at longer term trends.

-The Market Share graph compares your property's RevPAR to your Comp Set's.

-The variance between the two of these can be understood as the index premium

This graph can help you determine if there is a seasonal component to our market share, and if our competitors are defining their seasons differently from us. The report for full week data only.

-The External Factors table is a manual input These can include holidays, weather changes, school schedules in your market or key source markets.
-The Competitors manual entry. List your competitors in the first column and you major market segments in the first row across the top.

-Fill in the grid with how strongly each competitor performs in each segment.
This exercise should help you to understand how and why their seasonal performance may alter from yours, and may highlight

Overview:

Resorts experience sharp seasonal changes, significantly impacting demand and pricing. Group bookings, holidays, weather, and school vacations influence these trends, causing variability year-to-year. Operators must avoid pricing errors by understanding seasonality’s complexities.

Seasonality: Establishing Resort Rate Guidelines

Seasonality: Establishing Resort Rate