A few months ago, we published this visual with this sentence to say how much we liked early booking and, from our point of view, the obligation to have rising prices to generate maximum revenue. Several of our customers whom we have advised to create an early booking, to extend it (more choice) or to make it more attractive (a bigger discount) have all done so again the following year.
And a few weeks ago, Pierre et Vacances announced its results, in which early booking accounted for a significant proportion of the total. The coincidence with the Rugby World Cup has prompted us to highlight this image and develop our approach to early booking. We are convinced of the usefulness of early booking.
The benefits of Early Booking
1) It provides information about market appetite
Let’s take the example of a tourist accommodation operator: by including a wide choice of accommodation locations and arrival dates, it will be able to know, based on bookings, which locations are most in demand. As a result, they will know much earlier what type of action they need to take: probably price increases for dates/places that are in demand, probably promotional actions for dates/places that have had very few bookings. This gives you a quick overview of the appropriateness of the pricing positioning that has been decided on.
2) It improves cash flow
From a cash flow point of view, for the same level of discount, it is better to generate these offers before marketing rather than after. Provided, of course, that in your general terms and conditions of sale, customers pay for the service at the time of booking and not at the time of arrival.
3) It provides a better view of the staffing
By providing information on customer appetite for a particular period or a particular type of accommodation, it allows you to anticipate staffing requirements and avoid finding yourself without staff or, conversely, without anyone to welcome customers.
4) It attracts additional demand
We all have our own life cycle, our own habits, our own ways of living. Some of us like to anticipate, others don’t. Sometimes we can anticipate our trips, sometimes not. Business meetings are never scheduled a month in advance. A promotional offer won’t change anything: I’m not going to book an offer if I haven’t chosen my travel dates first. Early booking only marginally alters the buying behaviour of its own customers. On the other hand, it allows us to position ourselves better in this long booking period and to capture customers who weren’t booking with us because we were out of the market.
On dates when we know it will be difficult to fill, we can lower the price straight away to attract as many customers as possible from the outset.
5) It prevents future dilution
By creating a mattress of bookings, it allows the date to be potentially constrained, i.e. having taken a few too many discounted bookings and having to raise prices. This situation is beneficial because in the opposite situation, the company triggers offers to fill up when bookings are at their peak. The dilution is then extremely high. By anticipating these offers, there is little dilution because there were few or no bookings. This is pure incremental demand.
6) It prevents stressful driving
Another beneficial effect is that, by filling up comfortably, we can avoid the highly discounted offers that are triggered at the last minute because we find ourselves empty. This kind of stress management often causes us to lower the discount level well beyond what is reasonable in order to be sure of filling up.
7) It gives an advantage to customers who are profitable for the company
It’s a win-win deal: customers who book and give all these advantages to the company benefit from a lower price. It’s much better to capitalise on these customers than on the late bookers who are swarming all the new sites. At the last minute, you’re ready to give up everything to fill in: discount, commission. And next year will be even worse, with customers passing the word to each other: « wait before you book, they’re going to make last-minute offers ». We need to change this behaviour.
How does Early Booking work?
The requirements for optimal early booking;
- It must be sufficiently far in advance of the traditional booking cycle so as not to dilute the offer;
- The discount must be large enough to generate real interest: a 5% discount attracts no-one;
- It can be book by date (-x% before such and such a date) to reinforce the sense of urgency or sliding scale (‘if you book x days before departure, you benefit from …’);
- It must be broad in terms of offers but must include exclusions (exclusion of certain dates/weeks, accommodation, types) or limitations (x places only);
- It must not be undercut by new offers made in the following weeks, otherwise it will lose credibility;
- It is often No Flex, i.e. it cannot be changed or exchanged, to guarantee income.
Keywords: Early Booking, Rugby World Cup, Pricing, Reservations, Accommodation
