When to Discount and When Not to Discount


If an owner wishes to maximize annual revenue, they need to know when to charge more and when to charge less, when to be flexible and when not to. In the end, filling a calendar is a game of probabilities. With every reservation you should ask yourself, "what is the probability that I will get a better deal than the one currently being offered?" But, keep in mind the old saying that "a bird in the hand is worth two in the bush." The main factors to consider are: 1) Time of year 2) Length of guest stay 3) Last minute or not (aka last chance) 4) Gap fills Time of Year. Not every reservation is created equal. Demand varies wildly, with Christmas break being booked about 99% of the time, and other months sometimes struggling to get any reservations at all. To maximize revenue, we advise that all owners/managers be flexible with potential reservations for slow seasons, as they may be your last chance to generate revenue on those days. Last Minute (aka last chance)

Last minute bookings are usually the last chance for an owner to fill unbooked dates. This can vary from market to market. For instance, in Vegas you frequently get people who will book a weekend a week in advance. However, in Hawaii most people book at least one to three months in advance. Talk with one of our agents to learn more about yours.

Length of Stay

The longer the guest wants to stay, the better the reservation and the more inclined an owner should be toward flexibility.

• 1-3 days= Short Stay

• 4-6 days= Average Stay

• 7-14 days= Long Stay

• 15+ days= SUPER LONG stay

Gap Fills.

If two guests book dates and leave a five-day gap in between, it can be very difficult to fill those

dates (leaving you with no revenue). So, if you have a reservation that offers to fill three to four of

those days you might want to offer some flexibility, as this is probably your last chance to fill

those dates.

Summary

It’s all a probabilities game. Always ask yourself how likely you are to fill the dates requested if you don't close the current deal. Offer more flexibility for potential bookings that may be your last chance. For seasons like Christmas, you can require higher rates, longer stays, and less flexibility. Your agent will be a great resource in helping you understand the nuances of your particular market.