An exceptional event requires exceptional pricing? Many of you have asked us what strategy to adopt for the 2024 Olympic Games. Should you set exceptional prices? Here are some answers to help you make the most of this event.
What if there weren't that many people?
If nearly 3 billion people will be watching the Olympic Games, how many will come to Paris? Intuitively – and we at N&C have played the game of estimating the number of people individually – we’d like to think that there will be between 5 and 10 times more demand than in a normal year.
Except that forecasts from the Paris Convention and Visitors Bureau suggest that demand will be slightly higher than in 2019. The reason for this is that tourists who are only interested in Paris will opt for another year. There is a sort of replacement of tourists by others.
On the other hand, the partnership between the Olympic Games and Airbnb will add a lot of offers. More offers for a slightly higher demand than in 2019 does not encourage high prices (as good yielders as we all are). In fact, you only have to go to the Airbnb platform to see a plethora of flats for rent at perfectly reasonable rates. And if you see them, it’s because they haven’t yet been let. So either the demand isn’t there, or it’s too expensive…
Start with a strategy that cannot be cancelled or modified
Before talking about prices, we need to talk about cancellation conditions. A lot of hotels are going to see the 2024 Olympics as the goose that lays the golden eggs, going for very high prices, not selling out and slashing prices at the last minute. We saw this in 2016 for the European Football Championship. If you sell at flexible rates, you run the risk of your customers cancelling at the last minute to go to the cheaper neighbour.
Keep OTAs if you are not a hotel behemoth
This may seem paradoxical, as we are very keen to sell direct and save on commission. But if we assume that there are going to be a lot of offers, customers won’t need to do a lot of snooping to find a good rate: Booking, Expedia, Airbnb. In just 3 sites, they’ll have made their choice. This is a different clientele from your usual, core clientele. So if you are 70% dependent on Booking and Expedia, don’t close them down! And even if you only have 25% with them, you need to look at who your customers are in July and August. The share of OTAs may be much higher there. Unless you’re very frank, let’s be humble and use the OTAs.
Put only a few rooms up for sale and restock
To avoid having your hotel looted because the price would have been too attractive, we advise you to only open sales for x number of rooms (5 for example) over the whole event. In a few weeks’ time, you’ll be able to see whether the sale has taken off, whether some dates have sold out faster than others and whether you need to readjust the prices. You need to get a feel for the market to be able to adjust.
Playing with min stays to ensure optimum filling
Depending on how full you’re going to be, and on the peaks and troughs in demand that start to appear on different days, you’ll need to put min stays for 2 or 3 days on the dates that are growing in order to even out the filling. You could start straight away with min stays, but this would not protect you against peaks in demand and would not allow you to feel the natural demand.
Leave the groups to their little friends
Groups will create planning holes for you, they need a rate right away, several months before the start of the 2024 Olympics, while asking you for specific cancellation conditions. Leave them to their fellow hoteliers who offer group rates. You’ll take the individual request, which will be smoother and more manageable.
Adopt a reasonable pricing strategy
If you limit your sales to 5 rooms on the OTAs – or if you can set up an organisation to monitor sales very precisely – the risk of setting a price that is not high enough is contained. At worst, we sold 5 rooms at a price that wasn’t high enough. We are deliberately talking about a price that is not high enough and not too low, because the idea is not to start from a low price or a price x10.
Compare your usual prices at the end of July with those at the Salon du Bourget. Are you looking at x2, x3? Take a look at your weekly revpar, which combines occupancy rate and average sold price. The story may be quite different. We all have the advertised price in mind, but the prices sold are often very different… Especially when you break your price at the last minute. And don’t forget that at the Salon du Bourget, it’s the companies that pay, not ordinary people. Nevertheless, the Salon du Bourget is a very important date – or « peak » – and can therefore be a good starting point for positioning your initial pricing.
With this in mind, we think it’s a good idea to start with Paris Air Show-style prices for the 2024 Olympics – prices that have been sold, not those you were hoping to sell at the start. At worst, you’ll raise them after 5 rooms.
Good pricing strategy to you all!
Keywords: Olympics games 2024, pricing strategy, OTA, Pricing, Salon du Bourget
