As I walked up to the Booking.com offices in Los Angeles, I thought to myself, “This is where the magic happens.” I had been invited to West Coast HQ to see some proprietary data that could help me better price my listings.
I met my contact—a large man with a beaming smile— who opened his laptop and asked, “Well, what do you want to know? We have the best data in the world at our fingertips.”
I thought for a moment and asked him to show me booking windows for December. His keyboard rattled from the other side of the table and he responded, “Twenty-one.”
“Twenty-one days?” I questioned. “For which nights?”
“For the whole month of December,” he answered. I couldn’t believe it. The first few weeks of the month are typically full of business travel with short booking windows, followed by are the holidays with long booking windows and finally New Year’s Eve, which could be long or short depending on the stay length.”
We need a better booking window metric; something that can express each daily micro-environment on your calendar. We propose the Prime Booking Window. Let me show you how we use it at Buoy.
First, grab a date on the calendar. For this example, we will choose September 5. Look at your competitive set and find reservations from the last three years with at least one date matching September 5 (don’t forget to factor in day of week changes). Extract the purchase dates from those listings. You will end up with an array of dates like these:
These dates tell a story of reservations trickling in all year until July, then creeping up in July and August before a dramatic acceleration at the end of August. Indeed, 50% of reservations were confirmed after August 25.
I am always shocked by how short the booking window is.
So how do we use this data? Buoy keeps rates high until bookings pick up pace in July, then drop rates in line with our competition as August draws on, and finally adjust rates either higher or lower depending on how booking pace compares with previous years.
Beyond our pricing algorithm, we can also assign a Prime Booking (PB) number to each date on the calendar. If 75% of reservations are confirmed by September 1 for reservations occurring September 5, then September 1 would have a PB75 score for September 5. August 1 is PB40, meaning 60% of potential reservations have yet to be booked. July 1 is PB20, meaning 80% of potential reservations have yet to be booked.
Tim Speicher is CEO and Co-Founder of Buoy, a new solution to revenue management that replaces a generic base rate with its own intuitive algorithm. For more information visit buoy.us.