It is not unusual to experience fluctuations in any business, both in terms of sales and productivity, however, that faced by the hospitality industry in Nigeria, nay, the hotels in the country is overwhelming and has led to the closure of many hotels or left them in destitute conditions. Seasonality is a temporal imbalance which is mainly caused by a higher and lower concentration of the tourist/guest flow during certain periods of the year, affecting both supply and demand in such facilities. A long standing issue, probably the first to be encountered, for hotel owners and managers is how to maximize the sales of rooms during fluctuations- either to increase sales during down season or to shift sales during high season without losing the customer’s patronage. This means being able to sell the right room, at the right time and at the right price without displacing the guests who could have paid more. The problem with most hotel management strategies is that they approach seasonality in blocks of time rather than plan for each 365 days of the year.
There are three major categories of seasons in the hotel industry: the low, the off-peak and the peak periods. Low seasons are characterized by low patronage, low capacity utilization and high overhead costs. The major reasons for such fluctuations in patronage is the seasonal celebrations that occur throughout the year such as valentine’s day, Christmas, Local festive periods , on which both local and foreign tourist visit, and other official public holidays. The off-peak seasons have average patronage while the high or peak season are characterized by a high flow of patronage and often lead to overload of hotels’ capacity. The goal of hotels in Lagos, Abuja, Portharcourt and other highly concentrated areas of Nigeria is to be able to shift the demand or sales of the peak periods to the average and low periods or, at the very least, initiate processes that are directed at improving sales and patronage in these periods. Just as low sales season have negative impact on hotels performance, the peak periods brings its own punch of undesirable effects. Clients who see such hotels on booking sites like hotels.ng as unavailable most of the time tend to never book them when they become available during low seasons because the mind is wired to work on past information.
The idea that this phenomena is irrepressible should not be assumed. The way forward – however not straight – are numerous and depends on the overall operations strategies of the hotel in question. There are a range of actions that can be taken to minimize the negative impacts of such seasons and deseasonlize tourists’ and guests’ activities in a bid to maximize capacity. The traditional way of viewing seasonal pricing involved dissecting the year into blocks and charging prices accordingly – for high season and low seasons. This general approach also led to a number of other old-school revenue management strategies such as dropping room rates at the last minute to maximize occupancy and allocating fixed numbers of rooms to a particular market segment, channel or individual guest. One simple strategy that is often undervalued is selling to the room type. If you don’t stick to this approach, guests will come to expect the upgrade on arrival. At the very least, offer the upgrade but with an upgrade fee attached.
The standard way as practiced by most international hotels is forcasting the trend of room bookings either based on previous customer order or on demand-forcast. Today there are several scheduling strategies to use to maximize the use of capacity. Such include using Overall factors of capacity planning, Capacity Requirement Planning, Master Production Schedule and other operations management strategies to determine utilization rates of each rooms and schedule appropriately.
A well standing strategy is to increase sale and spread demand by using discounts on room rates and suggesting upgrades at a lower rate. A better strategy than attempting to shift demand during peak period is to differentiate the hotel offerings. Many successful hotels like Sheraton Hotel, Hilton Hotel, Radisson Blu and Four Points have taken advantage of this strategy by offering additional hospitality options like casinos, clubs, Events Hall and the likes. For instance Sheraton Hotels offers a world-class casino, swimming pool, a game of lawn tennis on-site ATMs, meeting spaces and ballrooms, Goodies Pub, La Giara, Terrace Bar and Crockpot and a fitness centre. Thus, they are able to increase patronage during low periods, reduce overhead costs and offer attractions to guest they let down during peak period.
No matter how big or small the hotel is, hotel managers need to adopt a suitable strategy to maximize revenue for any given day and season. Better approaches toward revenue management are being adopted by hotels and chains world-wide. Methodologically applying the above strategies or integrating it with a hotels’ overall strategy is certain to improve that hotel’s achievement of maximizing its facilities in any given day of the year.