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Low Hotel Occupancy: Causes and Innovative Solutions to overcome the Occupancy Crisis

Online Marketing 5 Minutes
Time and again, many hotels are faced with a key challenge: low occupancy rates. There are many reasons for this and its effects affect several core areas.

As hotel occupancy is directly linked to the hotel's turnover and profit, it plays an important role in the success of a hotel. Furthermore, a low occupancy rate can affect a hotel's reputation.

Below you will find an analysis of possible reasons for low hotel occupancy and how hotels can counter this problem with innovative online marketing.

Possible Reasons for low Hotel Occupancy


UNFAVORABLE WEATHER CONDITIONS:

  • Periods like the past early summer, when there was above-average rainfall, cause many guests to cancel their stay or plan very spontaneously from the start. This plays a key role in the vacation hotel industry in particular, where the focus is clearly on vacation and relaxation rather than city or business trips. As a result, guests tend to book their trips at shorter notice, especially in the early summer months such as May and June.

LOWER PRICE LEVELS IN SOUTHERN AND SOUTH-EASTERN EUROPEAN VACATION DESTINATIONS:

  • A recent press release from the "Statistisches Bundesamt Destatis" compares price levels for restaurant and hotel services from April 2024:
    Prices in these countries were significantly lower for these compared to Germany, with Italy having the highest vacation costs among the selected countries in southern and south-eastern Europe.

LATE EFFECTS OF THE CORONAVIRUS CRISIS:

  • Covid-19 is still having a major impact on travel behavior.
    The safety concerns of many guests immediately after the crisis meant that many people did not travel very far. There is currently an increase in the desire to travel long distances again: People are once again more willing to travel to more distant destinations and want to catch up on trips they have missed.

INCREASING COMPETITION:

  • Due to the increasing popularity of long-distance travel, hotels are now competing with more destinations than ever before. Ever better flight connections are further promoting this development.

RISING INFLATION:

  • Hotel prices in Central Europe are continuing to rise due to increasing inflation. This can lead to visitors switching to other destinations. This is encouraged by the aforementioned cheaper alternatives, good flight conditions and the increasing desire for long-distance travel.

THE INFLUENCE OF LARGE-SCALE EVENTS:

  • Major events such as concerts, sporting events or other large events also have an impact on the travel behavior of both locals and international guests. These events can influence demand both in terms of time, as guests change their vacation plans, and geographically, as travelers visit other destinations.

    The resulting shift in demand means that both the tourism structures in the respective regions and in the unaffected areas experience a change in demand for their vacation offerings and are thus confronted with a sudden increase or decrease in demand.

"Battle for guests": Competitive Pressure and Price Erosion

A noticeably low occupancy rate often causes hotels to soften their own pricing strategy. As a result, the prices of 5-star hotels and mid-range establishments, such as 3-star hotels, converge at times. Price dumping creates an even more intense competition for mid-range establishments. Although hotels in higher categories are able to increase their occupancy to some extent, the revenue performance achieved does not necessarily meet their own objectives and expectations due to the price reduction. This dynamic in the "battle for guests" makes it difficult for all hotel categories to achieve their economic objectives and leads to price erosion and a tense market environment.

Possible Actions for Hotels

In the current challenging market situation, it is more important than ever for hotels to use online marketing to continuously reach new guests and retain existing guests in the long term. It is essential to reach exactly the right target group that identifies strongly with the respective hotel. Continuously addressing and retaining these guests is crucial in order to achieve a plannable and sustainable occupancy and successfully master the intense competition.

It is also important to strengthen the hotel's own distribution channels and direct sales in order to be less dependent on short-term bookings via additional distribution channels such as online booking portals. This makes it possible to focus more on optimizing occupancy in the medium to long term.

This enables hotels to achieve their economic objectives despite the existing price pressure and remain successful in the long term.

CONCRETE SOLUTION APPROACHES

What can hotels do now to improve the situation?


HOLISTIC ONLINE MARKETING TO STRENGTHEN VISIBILITY:

TARGETING NEW GUESTS:

  • Innovative online marketing strategies such as lead generation help hotels to target potential guests through pop-ups on their own website, for example, and collect their contact data.
    Automated emails then help to set up regular contact points so that the hotel is remembered. Incentive vouchers are often used to encourage interested parties to book.

TARGETED ADVERTISING OF INDIVIDUAL OFFERS FROM THE HOTEL:

  • Attractive packages and offers are tailored to the needs of the respective guests and are advertised and communicated in a targeted manner. This way, hotels increase their competitiveness and, in turn, their own booking rates.

BIND GUESTS AND TURN THEM INTO REGULARS:

  • Automated email and newsletter marketing address existing guests individually and contribute to ongoing guest binding. Voucher actions for regular guests are particularly suitable for increasing guest loyalty and motivating regular guests to make further bookings.

EFFICIENT MARKETING AND REGULAR GUEST COMMUNICATION WITH MARKETING AUTOMATION SOFTWARE:

  • Continuous and personalized guest communication and data-based online marketing measures ensure the best possible results with a very efficient use of budget. However, both factors are very difficult to implement manually in everyday hotel life. Industry-specific software solutions help to analyze and segment existing and new guest data in order to use it for targeted guest communication and data-driven online marketing. Transparent evaluations also ensure a high level of measurability and form the basis for optimizing the entire marketing to achieve the best possible return on investment (ROI) in marketing and a high hotel occupancy in the long term.

A reliable Partner in Online Marketing for Hotels

ADDITIVE supports hotels as an experienced industry expert for hotel online marketing and uses revolutionary software and innovative marketing solutions to ensure higher hotel occupancy with more direct bookings in the hotel industry.
Both approaches - software and marketing measures combined - create the basis for a holistic system that always aims to achieve the highest possible revenue and return on investment (ROI) in marketing for hotels.

If you would like to learn more about ADDITIVE's innovative online marketing system and our software solutions, you can schedule a free consultation with an ADDITIVE team member: