Great Yields Require Operational Excellence
By Ben Scholl, Global Partnership Executive
I recently went on a quick road trip with the family and had the unfortunate reality of arriving in Eugene, Oregon, during the national Track & Fields Finals. While we weren’t in town for them, we were unable to shift dates and paid almost $600 a night for a mid-tier property.
From a strictly yield perspective, I get it. There was incredible demand from a city-wide event in a town with limited hotel rooms.
The yield curve demands a high rate. Even as a professional who gets economics, I couldn’t help but have raised expectations.
This highlights a truth that the best yield ecosystems understand—that humans have real expectations related to price and don’t just attribute price to market conditions or yield. The expectations gap is the space between the rate the market can get based on the yield curve versus the product's ability to deliver value at that price point.
Let’s explore ways hoteliers can mitigate this expectations gap.
Awareness of Inbound Rates + Operational Excellence = Reduced Expectations Gap
Many hoteliers are busy operating hotels and just leave pricing to the revenue managers. This is a mistake. While the best hotels use dynamic pricing to capture the most revenue, the best operators are aware of the rates inbound guests are paying. Awareness allows them to foresee when there may be a disconnect between the rates a hotel is charging, and the perceptions of value guests may have.
When you see a rate that is substantially elevated from what you normally see, this is when a good operator steps in to bridge the expectations gap.
Here are some tangible ways to do that:
Adjust the Staffing Model: Perhaps you typically can service with one front desk agent or one café attendant. When you see elevated rates, perhaps adjust the model so that wait times are reduced and you can provide space for team members to provide discretionary service.
Find Inexpensive Ways to Delight: Knowing there is a demand driver, perhaps find ways to connect with the city-wide event. A small welcome gift or aligned gesture can go a long way to close the expectations gap.
Communicate: Pre-stay communication, recognizing it is a busy time and sharing how you will ensure they have a great stay, elevates the welcome and can mitigate the expectations gap.
Have a Ceiling that Makes Sense
The pure math of dynamic pricing can often collide with the product realities. There is a point at which we do brand damage that we don’t want for the short-term gain on the rate. This is why the best hotels & resorts have a price ceiling that they build into their algorithm. This “Ceiling” rate will let your pricing system recognize the ceiling and resist exceeding it, even if demand allows.
If you’ve ever seen a TripAdvisor or Google review that says, “everything was great, but it wasn’t $### great,” you know that real brand damage can occur when we allow prices to outstrip expectations too much.
There will always be different customers with different price tolerances, but finding a common denominator ceiling that balances experience, expectations, and maximum revenue is a best practice to land each high-demand night.
We work hard to get these ceiling rates with our HouseCount RMS product, and even with our autonomous pricing, we respect the ceilings we set alongside our clients.
Good yield is a mix of art & math. When we go too deep into the math without the art of operational excellence, we can cause brand damage. As you think about your property, think about the steps you take to mitigate the expectations gap.
Even small changes can elevate both reviews and guest experience on your next high-demand dates.
