The Coronavirus outbreak is expected to have a wide-ranging impact on tourism and travel in general. This global event is already having immediate impact on the industry in the form of decreased air travel and shifting event dates. Furthermore, there could be long-term consequences in some parts of the world such as decreased economic activity through 2021.
Our primary concern is the health of our customers and partners, so if you are in a high risk area, keep in mind the safety advice of the World Health Organization. Besides that, here are some tips on how to use the tools available in PriceLabs to help navigate this situation.
Automatic Occupancy adjustments:
In times of uncertainty, adopting a more aggressive Occupancy Based Adjustment profile might be a way to automatically ensure that your prices get adjusted even before the market as a whole reacts. Since Occupancy Based Adjustments rely only on your own occupancy, it reduces the dependency of your prices on your neighborhood data, by discounting or increasing prices based on when your listing’s occupancy is low or high (even if your neighborhood as a whole is not yet seeing the same pattern). PriceLabs has implemented a “Coronavirus” Occupancy Based Adjustment profile, which takes into account the trends that we have seen in the global market and the market condition uncertainty for the upcoming months. To learn more about this setting, check out our post about Occupancy Based Adjustments.
Our data suggests that there has been a 80-90% reduction in new bookings happening around the world starting mid March. The most deeply impacted bookings are for dates more than 30 days out. This makes sense, as the uncertainty around when the current situation will end is making people hold off on making plans too far out in the future. Reservations with lead times of 7 days or fewer are also down, but seeing a relatively smaller impact — they now represent over 70% of all new bookings.
Adjusting length of stay discounts:
Since the start of the health crisis, there has been a global shift from short to long bookings. With this in mind, we are recommending that all of our property managers consider implementing substantial length of stay (LOS) discounts – Both Weekly and Monthly. Depending on the PMS connected with PriceLabs, LOS discounts can be implemented through your regular customization menu. If you don’t have this option on your PriceLabs account, you can also configure this customization directly on the PMS (or in Airbnb). As a reminder, LOS discounts are applied on top of PriceLabs price recommendations.
Global trends indicate that there has been a significant decrease in the share of short-term bookings. Before March 2020, bookings for stays of 7 days or less represented almost 80% of total new bookings. However, in the last two weeks, we have seen a reversal of this situation, where bookings of 8 days or longer now represent up to 65% of new bookings. Though we’re seeing the total number of new bookings reduce drastically starting early to mid March, bookings 8 days or longer have actually gone up considerably in the last few days.
Reducing booking restrictions (minimum stay and cancellation policy):
Another strategy to improve revenue is relaxing both the Minimum Stay and the cancellation policy requirements. A reduction in Minimum Stay requirements can increase a listing’s visibility on search results and ultimately, occupancy. To adjust for the short-term demand reduction without sacrificing future gains, managers can extend the “Minimum Stay for Last Minute Bookings” to “1 day minimum within the last 30 days”, for example. For more information visit our Minimum Stay page. Additionally, relaxing the Cancellation Policy can also make the listing more attractive to a wider audience – Notice that this configuration has to be done either on the PMS or on directly in the booking channel.
Adjusting for changes in event dates:
A few large, upcoming events have recently been postponed. While the cancellations are still coming in, the original event dates might still look like high-demand on your PriceLabs calendar and the new event dates don’t have high enough prices. Both issues can be corrected with Date Specific Overrides, with either “% price adjustments” and/or “min price” settings.
To learn more about it, check out our post about Date Specific Overrides.
Adjusting for changes long-term tourism trends:
Some of the most impacted areas might experience an overall decrease in occupancy in the coming months. One way to account for this is temporarily decreasing Base Price until the market recovers.
To learn more about it, check out our post about Setting the Correct Price Level for your Listings.
Alternatively, instead of making a Base Price adjustment which affects the whole calendar, there is the option of making a “% price adjustments” over the next few months. This override can be deleted or adjusted as the situation develops.
Staying up-to-date with the market changes:
Neighborhood Data can be a good place to keep track of how your local price and occupancy trends. As event dates change, you can monitor how your neighborhood through the “Price Trends in each Price Percentile” and “Occupancy Trends” plots.
To learn more about it, check out our post about Neighborhood Data.
We will also be regularly updating the data we’ve published on the Developing Booking Trends: Impact of Coronavirus – do keep an eye out on that.