Lowering Rates Won't Always Drive Occupancy
By Dana Miller
Hotel News Now
December 29, 2022 | 7:34 AM
Amid several surprises thrown at the hotel industry in
2022, Theresa Hajko, regional director of revenue
management at Spire Hospitality, kept one guiding
principal: Try to hold rates.
Hajko's advice is that if competitors in a market are
dropping rates and there's a strong reason behind it, then
it's feasible to follow suit. However, she doesn't want to be
the one to drop rates first, leading to everyone else
lowering rates as well.
In a Q&A with Hotel News Now, Hajko shared insights
into other trends and strategies.
What have been some big surprises this
[Pleasant surprises included] the continued strong
weekend demand through fall and some of the rate growth
we saw. Weekday occupancy was also quite strong
October through mid-November.
Additionally new companies and their production
replacing some non-returning 2019 producers.
An unpleasant surprise was the slow return of corporate
negotiated and government — still not quite where I
expected it to be by now.
How are your teams preparing for a
I strongly believe in just holding onto realistic rates. What
I tell the [hotel teams] is, if our competitors drop and we
need to drop, then of course we will, but I don't ever want
to be the first one to drop unnecessarily and cause
everyone else to lower their rates.
We are making sure that we are open on all channels.
We're also taking more [requests for proposals] or as many
RFPs as we can, where it makes sense. But we're doing
them at rates that are a percent off of the [best available
rate] so they flex when BAR flexes.
We're ensuring that our discount strategy makes sense to
the time of year, and we're setting rates such as advance
purchase or government. As an example, in some of the
hotels, our BAR rate is lower than government per diem
right now. We make sure that government per diem is in
line with BAR.
We make advance purchase more aggressive [and] we play
with the advance purchase window. A longer [booking]
window will drive rate and a shorter window will drive
We're reviewing and revising our 2023 group guidelines,
[local negotiated rate guidelines] and then anything that
does not fall into those guidelines, we're having
discussions about. If we need to, we run a profitability
analysis. We're basically not letting anything go.
Group is always a focus and will continue to be, so we are
layering in group as our base for 2023, which is going to
hopefully allow us to drive rate.
What are some under-estimated
I think one of our biggest challenges, especially when you
get to this time of the year or a slower time of the year, is
when competitors lower rates unnecessarily thinking
that's going to drive occupancy.
[Also] more competition opening in markets that are
already saturated. A lot of people sat on hotel opening
plans over COVID or they didn't have the financing and
couldn't build. Once the worst threat was over, everybody
moved forward with their plans to open that business, so
we're up against that.
What opportunities are you hoping to act
Right now, our focus is ensuring we have a successful
finish to RFP season and LNR season as well and making
sure all of our rates are loaded for next year — the
appropriate increases have been loaded.
Making sure that we're on all shelves and priced right
based on the time of year. Making sure all of that is set up
right now while we have the time to do it.
Which distribution channels are you
paying most attention to?
We're really trying to drive more people toward our
brands' sites because that's the most profitable site.
For example, making sure that they have a good
competitive advance purchase rate out there and again
adjusting the booking window settings, to just drive more
people to that brand. OTA is always going to be a key
player. The brands, though, are taking a really hard stand
on us participating in any kind of OTA promos that make
the OTA rate lower than what someone could get on the
brand. We're focusing on some of the things that the
OTAs do allow. They do allow you to run travel ads, it's
OK for us to participate on the package path because your
rate is opaque on the package path. Then, at least one of
the major OTAs has changed their algorithm so that guest
satisfaction now has much heavier weighting. We remain
focused on guest service, guest surveys in that segment to
help our positioning.
We put in place a welcome letter that they get when they
make a reservation. [It] fills in some of the blanks about
the hotel, it answers a lot of questions, it's from the GM.
It's even prompted calls directly to the GM, which they
think is great.
What conversations should be had about
Don't turn away any group without a conversation.
In some of my hotels, if it's a day or week where we
historically don't fill and we know we're not going to fill,
we do a profitability analysis and [if] it makes sense, we
still will take it. If it's not going to displace anything
higher rated, we go for it.
We know from two to three years ago what occupancy we
ran, what occupancy the set ran. If nobody ran a high
occupancy and there's no event on the books for this year,
we have a pretty good idea that it's still not going to be
busy next year. We'll book it even a few months in
I always say [to my team], those decisions are easy when
you have all of the information you need. They're only
hard and there's only indecision when we don't have
enough information, so I'll go back and dig out [data] for
the [past] three years.