Identifying Opportunity for Hotel Revenue Amidst COVID-19 Challenges

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by Stephen Davis, VP of Pricing and Revenue Services, Integrated Insight

Published October, 2020

The total economic impact of COVID-19 on the travel and leisure industry led many hotels and resorts to experience one of the softest summers in recent history. Grand Traverse Resort and Spa in Traverse City, Michigan, was not immune from the impact as groups and conventions were cancelled and some families chose to pass on their summer vacation.

Grand Traverse Resort and Spa engaged Integrated Insight in late 2019 to identify revenue opportunities. The resort is a beautiful property with excellent service, world-class convention facilities and a strong EBITDA – the dream scenario for many hoteliers across the country. But we saw opportunity for even stronger revenue and profit.

Grand Traverse Resort faced ongoing revenue management challenges that many resorts wrestle with: balancing group and leisure bookings to achieve the highest profitability. There were difficult questions to answer. What base volume of group bookings achieves the highest profitability, while complementing leisure demand? And how do you get confident turning down groups during periods in which leisure business would be more profitable?

When the demand for group bookings was compromised due to COVID-19, the resort had little risk shifting its revenue management strategy and decided to get creative. Fortunately, because of the resort’s location in the northwestern part of Michigan’s Lower Peninsula, it was among the first in the state to be able to re-open.  With groups and conventions canceling, the resort had more capacity for the summer than ever before.

Integrated Insight worked with leadership to launch a successful room promotion when the resort reopened at limited capacity. We helped the resort strategize a marketing campaign to make consumers feel safe and excited for outdoor recreation.  As it turned out, that’s exactly what Michigan residents wanted to hear. Pretty soon the resort was seeing the remaining summer weekends book up with leisure business at rates well above prior years.

In spite of COVID-19, Grand Traverse Resort achieved its highest ever average summer weekend rates and had near sell-outs during July, August, and early September weekends. It was fulfilling to see Grand Traverse Resort and Spa have enough success to remain open for the summer. It was also strong confirmation that they were limiting leisure business in prior summers by booking too many convention room nights at rates well below leisure business.

Typically, changes to revenue management strategies take incremental steps for clients to execute. We saw the opportunity to move towards more leisure business and higher rates, but doing quickly is often easier said than done. COVID-19 forced them to book more leisure and proved their rates could be higher. It was a beautiful silver lining, really.

In 2021, Grand Traverse Resort is highlighting the safety of its convention facilities and the steps they are taking to allow socially distanced gatherings - balancing both leisure and groups to yield optimal revenue. When faced with uncertainty, we are often willing to take more risk. In doing so, Grand Traverse Resort and Spa discovered confidence moving forward about their business, value, and future opportunities.

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