By Chema Herrero (CEO of Bedsrevenue)
We usually focus our Revenue Management strategies on a continuous analysis of our own pricing and our competitive set and their evolution.
It is evident that the pickup variation is what activates these changes and makes us move prices.
This “booking pace” sales rhythm is one of the daily visions within the Revenue strategy and it is because it alerts us to the need, where appropriate, to activate or not activate additional sales levers or create restriction systems in the management of the room inventory.
After the COVID period, the majority of hotel establishments opted for maximum flexibility in sales conditions, in many cases forced by the situation itself given that they depended on variables that changed continuously, generating a state of permanent doubt. It was then that we began to weigh the cancellation rates of each segment in a very special way.
In the current Revenue Management strategy that we create at Bedsrevenue, we are very aware of the cancellation averages of each of the segments and sales channels, since with them we validate the reservation quality ratio that helps us to have a forecast of the main KPIs of the possible GAP between reservations On the books that we maintain and the final closure.
This cancellation rate allows us to establish strategies for managing the conditions of certain channels with much higher cancellation rates.
It also allows us to minimize cancellations in those products and combinations of products with a diet that provide us with the most profitability and that we must “shield” the most.
Therefore, we are talking about a ratio that is extremely important to control to know how secure our future income is and how much we should push our sales strategy if we have high cancellation ratios.
There is no data that is generally shared about this ratio that allows you to see what your situation is above the average, which is why at Bedsrevenue we have tried to shed some light and present some data that can guide you.
The infographic of the year: Cancellation rates 2023
One of the objectives of the report is to know how cancellations have behaved on average throughout 2023, although we have consolidated data until September 2023 and OTB cancellations from October to December 2023.
The average cancellation ratio in 2023 is 25.5%, which represents a decrease compared to the same rate in 2022 of 1.5%.
Within this cancellation ratio and from the point of view of the main segments of the hotels checked, we have as a result that it is the OTA segment that has the highest cancellation rate and in Booking.com it takes the gold medal with an average cancellation ratio of 35.70% of reservations, which represents a growth of 1.10% over 2022 data.
At the direct sales level, in which we have included cancellations not only on the website but also call center and counter cancellations, the ratio stands at 23.10%, which represents a decrease of 1.80% compared to the 2022 data. .
The tour operation has similar ratios to those found in direct sales with two main players such as w2meet and Jet2 with averages of. 23,9 % y 22,30% .
Finally, and in order to know the photograph/pattern of cancellations per week, it is detected that Fridays are the days with the highest number of cancellations with 20.48%.
