Black Friday: the new frenemy of the hotel industry
Black Friday was born in the United States as a retail holiday and has since spread internationally to become a key commercial event for all sectors, including tourism. For hotels, this event presents an interesting dichotomy: it is a powerful tool to attract new customers and fill rooms, but it can also punish and cannibalize future sales.
Impact on hotel bookings and rates
According to an analysis conducted by BEONx, a leader in revenue management solutions for hotels, the week of Black Friday (as seen in the graphs below) is one of the lowest in terms of booking prices throughout the year due to applied discounts, although the price drop is smaller than the increase in booking volume.
This growth in occupancy is more notable in vacation and urban destinations with high tourist demand, with customers booking mainly for holiday periods or summer vacations, and less pronounced in the corporate travel segment, which did not experience a significant change and showed lower sensitivity to promotions.
Additionally, there is a notable impact on last-minute bookings, as 20% of the reservations made during Black Friday were for stays within the following 15 days.
The BEONx analysis also highlights notable differences in sales channels during Black Friday week, with more than 60% of bookings made through OTAs. This implies a greater dependence on intermediaries and lower margins for hotels.
Friend or foe?
Black Friday presents unique challenges for hoteliers, especially in terms of inventory cannibalization and seasonality. Unlike retail, where inventory can be adjusted to demand, hotels work with a fixed stock of rooms, creating competition between market segments as well as between present and future sales.
This is particularly noticeable during high-demand periods, where hotels already have high occupancy levels, and dynamic pricing tends to significantly increase rates.
It is also important to consider the particular consumer behavior in the hotel industry: while in retail the product is acquired almost immediately, in hotels, bookings made during Black Friday are often for dates far in the future. This introduces additional risks, such as cancellations or changes in demand, and limits the immediate impact of promotions on customers, who reduce their impulsivity when the experience is seen as distant in time.
On the other hand, aggressive discounts and a heavy reliance on OTAs not only affect the direct relationship with the customer but can also reduce profit margins, impacting profitability.
However, Black Friday also offers unique opportunities for hotels. The high volume of searches and bookings during this period allows hotels to gain visibility and attract new customers, especially on digital platforms. Furthermore, promotional periods have proven to be effective in curbing demand drops during low-occupancy periods.
How to turn Black Friday into an ally for hotels
Design smart offers
The nature of the hotel product, which transcends the tangible to offer travel experiences, allows new elements to be introduced into the offer beyond discounts, such as upgrades, exclusive activities, or other incentives that preserve margins and serve as a stimulus for potential customers.
Hotels can balance the impact of discounts by designing packages that include additional experiences, such as themed dinners, unique local activities, or spa treatments. These offers not only add value to the stay but also contribute to creating a more memorable experience for guests, encouraging direct bookings and increasing the average revenue per customer.
Promote direct bookings
Direct marketing is an effective strategy to encourage bookings during Black Friday, sending personalized emails to past guests with exclusive access to special offers. Complementing this tactic, incentives such as free nights, exclusive discounts, or credits for hotel services can further motivate customers to choose direct booking, strengthening the guest relationship and maximizing hotel revenue.
Implementation of a revenue management system (RMS)
When managing the complexities of Black Friday promotions, having a Revenue Management System (RMS) in the hotel is essential for price optimization and distribution, allowing:
- Predictive demand analysis and dynamic price adjustments.
- Customer segmentation to create personalized offers for different guest profiles, maximizing conversions.
- Distribution management across multiple channels, ensuring consistency in pricing and availability across all platforms.
Long-term loyalty
Despite the challenges Black Friday presents for hotels, this event offers a great opportunity to attract customers who can become repeat guests. Offering attractive incentives, such as discounts on future stays or exclusive benefits, can not only boost bookings but also foster long-term loyalty.
Additionally, Black Friday can be an opportunity to expand the database of new customers, collecting key information that allows personalized marketing strategies to be implemented and maximizing the value of each booking.
In short, with proper planning, hotels can turn the challenges of Black Friday into sustainable benefits, strengthening their competitiveness in the market.
