Everything You Still Don’t Know About the Booking Window—And Why It’s Crucial for Revenue
In this article we’re going to show why the booking window is so crucial for optimizing revenue generation all year round.
The booking window is a crucial factor when it comes to revenue management, and it’s essential for any hotel or B&B owner to understand what the booking window is and how to leverage it to increase revenue.
Let’s dive in.
What is the booking window?
The booking window is the time between a customer booking a room and that customer arriving at the property for their stay.
Or more simply, the booking window describes how far in advance guests book their stays.
This window can vary massively across seasons and between different types of properties, depending on factors like the characteristics of your accommodation, your customers, the destination, the time of year and various others which we’ll touch on.
Why is the booking window important?
Knowing how far in advance your customers generally book allows you to increase the price of your rooms at the optimum time, for maximum profit.
Good revenue management means selling at the right price at the right time, and it’s the booking window that tells us when exactly this moment falls.
Here’s an example. Imagine that the busiest period of the year for your property is the week beginning August 10th, and that the booking window for that period is 3 months. This means that those staying with you on August 10th will likely book around May 10th.
Since there will be so many people booking at this time, and thus a greater demand for rooms, this is a good time to raise your rates. Prior to this period, there is less demand and raising the price would mean alienating those customers who are looking for advantageous prices.
Similarly, after this booking phase the number of available rooms has decreased, demand therefore increases and you can afford to raise the prices even more.
Knowing the booking window therefore allows you to raise or lower your rates with confidence. Without a firm booking window, you risk costly mistakes and leaving customers (and turnover) on the table.
How to calculate the booking window
To calculate the booking window, take an average of your booking history by looking at previous years and seeing how far in advance you received the majority of your bookings for a given period.
Of course in today’s market you can obtain this information instantly through your channel manager or your “reserved” area on OTAs.
Bear in mind that OTAs like Booking.com and AirBnb only show you the booking window for reservations made on their platform—you should always compare this data with your other booking channels to get a 360o picture.
Also consider that, although these tools generate a booking window automatically, there are several elements which influence the window; elements you still need to understand in order to perform revenue management effectively.
Some of these factors can’t be predicted year-on-year, which makes them even more relevant. Here are the biggest factors to consider:
An unexpected event in your area could easily spike demand and cause a very different booking window to what you’d usually expect. Imagine a major football match takes place in your town, with tens of thousands of fans looking for a place to stay.
If this match is scheduled (and tickets sold) months in advance, it’s likely that most of your bookings will also be made months in advance. However, if the game is part of a knockout tournament and your local team qualified just a few weeks ago, expect a rapid and unseasonal surge in demand!
For areas where bookings are highly sensitive to weather conditions, the booking window can be very small as people wait until the last minute before booking—generally to make sure they know what weather to expect.
Fresh alpine powder in February might have a negligible effect on the booking window (since skiers generally expect snow on the slopes in February) whereas a sudden rush of snowfall in November might induce last-minute bookings.
Active Distance to Date
This parameter indicates the time it takes guests to travel from their home to your property.
If your guests live within a few hours' drive of your hotel, then the active distance is very small. As a result, the booking window can last up to the very morning of their first night’s stay. However, for guests that live on the other side of the world (and have to board multiple planes to get to you) their active distance is longer and their booking window is proportionally longer—ending a few days before the vacation start date.
Two serious risks of ignoring the booking window
Now that you understand what the booking window is, it’s crucial to understand two revenue-losing mistakes properties make when trying to leverage it.
The first mistake is to sell all the rooms too early. If you've been fully booked for months, during the busiest period of the year, then you’re leaving money on the table. During your busiest season, the demand for rooms increases while their availability decreases.
As long as you leave some rooms free to sell closer to the time, you can afford to up your prices and increase your margins in the meantime. By selling all your rooms in advance at a “reduced” price, you eliminate an opportunity to increase turnover during the most profitable period of the year.
The second mistake is not considering the active distance to date when trying to sell rooms at the last minute. It makes sense to keep a handful of rooms free for last minute bookings, but only if guests actually have the opportunity to book.
As we already said, this is only possible if your target customer lives a few hours away from your property and can realistically make the last-minute decision to book a room. The situation is different if your customers live abroad and need several days to make the journey.
In that case it makes no sense to offer a room the day before for the day after—obviously. But in order to know if leaving rooms available is a good idea, you need to know the booking window!
That pretty much wraps up our take on the most important things to know about the booking window. By following our advice, you can help make the most of your revenue management business.
Did you know that there’s also automated software that can help you master the booking window and manage your rates even more effectively?
Smartpricing is a revenue management system that reduces the time you have to dedicate to revenue management and, historically, increases client revenue by up to 30% YoY. It’s simple to use and generates important results for its customers.