Insights

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2022 Cancellation Rate Trends: How can you maintain guest retention

Without a doubt, one of the most challenging things about running a hotel is the tendency for guests to make a reservation but then frustratingly cancel at the last minute.

Given the current climate we are all facing, there are multiple reasons why travellers and guests are cancelling their bookings and deciding to drop-out of their plans at the last minute. As rates rise year on year, forecasting and pricing decisions for hoteliers will continue to be undermined which magnifies inefficiencies, increases costs, and damages margins.

In 2019, we found that the share of direct booking revenue lost due to cancellations had jumped to 15%. Now in 2022, our latest research reveals this figure has skyrocketed with 20% of bookings cancelling – a 33% increase over 2019 for the same period.

So what can hoteliers do? Below, we delve into the state of cancellations in 2022, the patterns that hoteliers need to be aware of, and the tools that can help businesses deliver a proactive booking retention game plan.

Learn how vital hotel systems can be interlinked to improve operations, better connect with guests, and provide real loyalty rewards that move the needle on maximizing revenue.

The hotel industry may be welcoming more guests now than pre-pandemic times, but resource limitations and the uncertainty about the trends that will impact the industry going forward remain top of mind. Fortunately, advancements in automation and guest recognition technology have made it easier than ever for hoteliers with less staff to manage operations while exceeding guest expectations.

Hotels are challenged with finding the right technology solution that will help them to improve the guest experience. Hoteliers must consider the capabilities of the technology they are investing in and their partners’ capacity to provide support as well as find new ways to improve their platform over time. Understanding how this technology fits into the working system and the ways in which it can continue to improve process, is really important in alleviating the ‘technology burden’ and allowing hoteliers to focus on what’s important to them; their guests.

In this report, you’ll learn :

• How automation is helping hoteliers to save time and increase efficiently
• What questions to ask to properly automate your hotel’s operations
• How hotel recognize guests in ways that reward loyalty
• The ways hotel loyalty programs have evolved
• Why traditional loyalty programs are no longer a necessity today

Learn how to improve guest satisfaction at each touchpoint – from booking to on-property to post-stay follow-up – while maximizing revenue every step of the way.

As the hotel industry emerges from the COVID pandemic, it’s clear that the desire for travel has not diminished these past two years; in fact, it appears to be as strong as ever. But while demand may be back, your guests’ wants, needs and demands have changed, and so should your offerings. Guest expectations have never been greater, and the owners and operators who evolve their offerings to meet and exceed them will stand out amongst the crowd.

Hospitality commercial teams have expanded their strategies to examine and improve all aspects of the guest journey, from the dreaming and research phases, through the booking phase and on-property experience, all the way through post-stay follow-up. At each touchpoint you have with the guest along their journey, there are opportunities to “wow” the guest as well as drive more revenue through upsell programs and personalized offers. With the right digital tools in place, hotel commercial teams can maximize revenue per guest – not by constantly pushing offers the guest is not interested in, but by anticipating their needs and providing a memorable experience that ensures the guest will return.

In this report, you’ll learn:

• How to adapt to changing guest travel and booking behaviors

• Why you need to tailor the booking experience

• Key ways to drive direct bookings in today’s changing world

• How to create a well-rounded distribution strategy

• Why the employee experience directly affects the guest experience

• How to personalize the guest experience at all stages of the journey

• Why automation is key to the employee and guest experience

• Why guest loyalty is changing and how you can adapt

The essentials of managing casino customer demand to optimize profit.

By Sue Murphy CRME, ComOps

Introduction

Casino hotels comprise only a tiny fraction of hundreds of thousands  of hotels across the world. Perhaps due to this limited scope, the  industry lacks universal performance metrics, and casino customers  might find frustratingly varied booking experiences across different brands. The ongoing legalization of gambling-related activities,  however, has fueled growth in the commercial and tribal casino  industry over the past few decades. With casinos now in almost every state in the US, knowledge about gambling operations, loyalty  programs, and marketing tactics is increasingly prevalent. Gaming operators have long expanded into other hospitality industries and,  recently, online. Resort casino properties often host a vast array of offerings, including gourmet restaurants, spas, golf courses, and of  course, hotels. About 30 percent of almost one thousand casinos  across the US have a hotel on site. In most cases, the hotel is viewed as an amenity to the casino and not the other way around.

How do ownership groups and leadership teams ensure they get the most out of each room and measure success accordingly? What does casino segmentation look like compared to customary market segments, and how can casino hoteliers ensure they provide the best experiences to their most valuable customers? This paper aims to address some of these questions, explicitly targeted at the revenue management of casino hotel properties.

Since its inception in the airline industry more than 50 years ago, revenue management has
been applied across various industries and sectors. Already widely implemented to optimize airplane seat and hotel guest room revenue, revenue management has expanded into other profit centers, including cruises, convention space, restaurants, spas, golf courses, entertainment venues, and car rentals. The discipline has also extended outside travel and leisure to short-term housing rentals, storage units, and even hospital beds, to name some.
Businesses of all leanings benefit from maximizing revenue and profit from perishable inventory. For many hotels and resorts, ancillary non-room spend can be well over 50 percent of total revenues. This is probably most true for casino hotels, where the vast majority of property income is generated on the gaming floor.

It should come as no surprise to learn that casino hotel management companies were especially keen to adopt and implement the practice of revenue management and apply it to their casino guests. Yet while the ability to yield gaming revenue from casino segments is among the more crucial components of maximizing hotel worth in a casino environment, it is perhaps the least well-understood. Successful revenue management in a casino hotel requires in-depth knowledge of the gaming customer and an ability to measure projected guest worth. Revenue optimization also requires that all hotel demand is yielded. This means casino guest reservations are booked based on customer worth without preset offers or ‘guaranteed’ rates. The combination of understanding guest worth and yielding all demand allows for optimal revenue and profit.

Casino customer valuation and segmentation

Segmentation

Segmentation is a critical component of any successful
hotel revenue optimization strategy. In casino hotels, the worth breakout for gaming guests is essential, but it is also necessary to understand the non-casino business mix. Increasingly, casino hotel properties analyze their hotel business on two levels—one for traditional market segments and the other for specific casino segments. The main difference between the conventional market segments in casino vs. non is the need to include ‘casino’ as a source of business. For financial purposes, hotel leadership must ensure the casino source is further broken down into “cash” room nights and “free” or “comp” room nights, as demonstrated in the example provided.

Valuation
The casino segments, as defined above, work for financial reporting and budgeting but are
insufficient for yielding purposes; hotel leadership has to collaborate with marketing to build
out additional breakdowns based on projected customer worth. The guest’s worth segment
dictates whether they will receive a discounted cash rate, a comp offer, or a combination of
both.

Casino customer valuation requires a data warehouse with detailed revenue tracking at the
individual guest level. Fortunately, a player database is the foundation of most casino loyalty
and marketing programs. Casino customers are heavily incented to use a loyalty club or a
“players card” to reap rewards such as free slot play, complimentary dining, and room nights. For chains or multi-property entities, a universal database is a best practice, encouraging loyalty to the brand and enhancing the customer relationship. The loyalty database will include various levels or tiers ranging from brand new customers to the most loyal ‘VIP’ guest. A customer’s tier level is based on their cumulative worth, derived from slot and table play, but increasingly RM teams are incorporating non-gaming ancillary spend (cash spend for hotels, F&B, etc.), and casino management companies are starting to integrate sports betting and online gaming with the recent advent of both in several markets.

While cumulative worth or loyalty can be a factor  in the hotel valuation, from a hotel revenue standpoint, it is necessary to understand a customer’s projected worth for each night of their stay. The customer valuation is usually an in-depth formula incorporating trip and play history to devise an average nightly estimate of a guest’s potential future worth. This estimated worth (or profit) value, along with the forecasted demand, dictates the price quoted to that guest. More precisely, the value determines the customer’s segment and dictates pricing at the segment level. A hotel gaming enterprise can decide which segment breaks are best suited
to their business, just as they will want to customize the customer valuation for their needs. A smaller property, for example, may have fewer segments but more breaks at the higher worth end of the database. Certain hotels in high frequency markets may ignore non-hotel trips in the valuation as it would be less predictive of their play behavior during their stay. More info in: “The Revenue Director & Casino Customer Valuation” by Matt Flemming,
https://www.comops.com/our-insights.