The 2010 Commonwealth Games (CWG) is going to be the largest Commonwealth Games. There are going to be 17 different sports and over 285 events. Also, 72 nations will be competing against each other.
It has been predicted that the CWG at Delhi will increase the capital’s GDP by up to 49% – but there are question marks around whether local hotel managers who see Rupee-signs flash in front of their eyes – will be able to experience the full economic benefits of this major event – including prior -to and after the event.
In the lead-up to the event, hoteliers from across Delhi may be asking themselves: Will we manage to capitalise on the increased demand for their rooms? Will we be able to balance the huge demand from the games attendees, willing to pay the higher rates, with the need to please and maintain our existing customer base? Will the volume of demand actually materialise, and will the value of the demand be as expected, or will rate gauging be prevalent, resulting in lower demand and will cancellations and no-shows result in rooms remaining empty throughout the event?
To help address these issues, revenue management provider Ideas, has put together five tips for Delhi hotel owners and managers.
Ideas’ recommendations for Delhi hoteliers
1 Minimum length of stay
Over the course of the CWG event period, Delhi hoteliers are encouraged to look closely at length of stay for its regular customers as well as CWG demand. There will be business people who want to arrive prior to the games and leave, perhaps, during the event.
The same is true for middle and post the event. These bookings should be encouraged at the right price to ensure there is no “shadow effect” either side of the games. Enforce a minimum length-of-stay for people coming solely to see the games.
This will encourage longer booking periods and will have a positive impact on occupancy levels throughout the event. The length of stay requirements imposed by hoteliers would need to differ according to the price points the hotel is pitching itself at and its target market.
Less expensive family orientated hotels should look towards a longer minimum length of stay, as this will probably entice families to extend their trips, whereas higher price oriented hotels may face tougher competition from wealthier clients to enforce longer minimum booking requirements.
2 Find a proper balance
Paying careful attention to the balance between normal base business and the actual period of the CWG, will help guarantee that all long-term occupancy levels will be improved, while still maximising patronage levels at the event.
3 Optimal pricing strategies
The pricing strategies in the lead up to the CWG will have to be carefully managed by individual hotels in Delhi. While an expected increase in demand on significant days will allow rates to be driven accordingly, this will not be the case on other less significant days.
Ideas Revenue Optimisation recommends that a careful and direct marketing strategy is put into place to entice visitors to arrive earlier than the significant periods of the event. This would mean hotels would need to pay significant attention to particular days.
4 Pre-payment plans
To minimise the impact of costly last-minute cancellations, it is recommended that Delhi hotels implement a system of phased pre-payment restrictions.
By clearly stating the terms and conditions of ‘no-shows’ and cancellations, hotels will be able to dramatically minimise any potential negative impact on revenue. If, as expected, there are a large number of cancellations, these pre-payment plans will allow hoteliers to recoup a large slice of their lost profits, which will then be complemented by last minute fill-ins.
5 Overbooking
Appropriate overbooking levels should be set by hoteliers across Delhi to counteract the expected rise in cancellations. Overbooking will be a key part in achieving 100% occupancy in hotels across Delhi for the CWG.
Depending on a hotel’s business mix and the number of guaranteed bookings it has, it can be recommended to overbook a hotel by at least 5%. This should gradually be reduced as the transient pace increases and groups are being washed to more accurate numbers.
The implementation of these recommended strategies, combined with a careful and detailed observation of the levels of demand, will allow hoteliers to achieve the correct balance between price and demand, and maximise their revenue potential for the duration of the CWG.
About Sivaprasad Gangadharan
Sivaprasad Gangadharan is the regional director, sales for India and the subcontinent, Ideas, an SAS Company
