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Pencil: Myth Busting The Booking Window

By Chuckmonster on Tuesday, 12th October 2010 5:01pm
  » filed under Note To Self...  comments: 8


In case you didn't know, real time hotel room pricing really fascinates me. I've often wondered if it was possible to detect pricing trends using published hotel rates for statistical basis. Specifically, I want to know when the optimal booking window is for reserving hotel rates - two days, two weeks, two months in advance. With the advent of products like Orbitz' "Price Assurance" trippers are guaranteed to always get the best rate for the dates they booked. Conversely, casinos have begun peeling away the ability for trippers to change/update their bookings when better rates are found.

Building on the Fall 2010 room rate study, we've revisited a number of the properties studied and crunched a new set of numbers for the same dates, 14 days apart. The hope is that after a number of these types of studies, we'll have a better idea about the ever elusive "booking window" concept.

The data for the first sample set was scraped from resort website booking engines on September 28th. The second set was pulled on October 12th. A comparison of the property averages for both yields some interesting findings.

Pencil 14d Average

On the whole, properties seem to be increasing their rates as the booking window moves forward, which lends some credence to the idea that one should book their trips as far in advance as possible. At the 5000 ft view, only Wynn seems to ask for higher rates initially, then discount slowly if demand isn't strong. The MGM and Harrah's properties have all increased their rates, presumably as room supply decreases.

Pencil 14d Diff

Aria's room rate asking price remained locked at $209 for both sample periods. Mirage's massive 30% jump was caused by a dramatic spike in room rates on October 30th which we discussed earlier... wow $800/night!

Comparing each resorts' pricing trends reveals puts a story behind the percentages.

Pencil 14d Wynn

With very few exceptions, Wynn seems to have shaved a coupla points off all of their rooms equally across the entire board. The steady discounting seems to start at approximately four weeks ahead of search date (from 11/12 - 11/30) with rates softening even more around Thanksgiving. Based on the data, our recommendation for booking Wynn is to do so 1-2 weeks or 4-6 weeks prior to arrival.

Pencil 14d Wynn

Bellagio's rates algorithm appear to be based on an increased demand scale, not a decreasing demand scale - essentially a conservative / pessimist view of booking futures. The data reveals that published rates are never reduced as arrival dates draw closer. Based on this, our recommendation for booking Bellagio is to do it as far in the future as possible.

Pencil 14d Wynn

As mentioned, this data sampling shows a lot of volatility in Mirage's room rates, with two spikes driving the overall increase to 30% compared to rates sampled two weeks ago. A deeper look at rates shows that Mirage has increased rates across the board for nearly every date studied. We're going to take Bellagio's lead here and recommend that Mirage visitors book their dates as far into the future as possible.

Pencil 14d Wynn

Strangely, ARIA is bucking the MGM trend of demand based room rate increases as the booking window gets smaller. Within a 7 day booking window, ARIA's rates demonstrate a great amount of volatility. Based on this data, we suggest that trippers looking for an Aria booking make their reservations at least three weeks in advance of their arrival, preferably at the five week mark.

Pencil 14d Wynn

The data reveals that Caesars Palace is trending towards weekend sell outs within 1 week of booking. Rates from the 2 - 4 week mark also exhibit some degree of volatility. Based on this data, we recommend that you book Caesars 4-6 weeks in advance of your visit.

Pencil 14d Wynn

Flamingo also appears to be doing demand based pricing, with base slowly increasing as the booking window closes. Our suggestion is to book the Flamingo at least three weeks in advance.

We'll back to wrap this study up in about two weeks, where hopefully we'll have enough data to put together some hard and fast rules about booking windows, or at least have some of the theories outlined here borne out by more information.

Tagged: pencil   flamingo   caesars palace   wynn   bellagio   aria   mirage   room rates   


Comments & Discussion:

Damn, very interesting. You put some serious time into this story.

Excellent post, Chuck. I would love to see the data from 2006 as compared to 2010. I have to believe that all of the higher end resorts would have looked like Bellagio's chart.

This is great stuff--academic in the best sense of the word. I look forward to seeing more.

look forward to the next installment

Great analysis, but I would guess most readers don't book at the rack rate. It would be great to figure out a way to incorporate player's club offers into a similar analysis? Perhaps for the lowest level offers (e.g. a hypothetical guest who has signed up for a card, but has wagered less than $100 total). I wonder how complex the rate adjusting algorithms really are, or whether the managers sit around in weekly meetings and decide based on reservation spreadsheets.

Good stuff Chuck. I've noticed lately that fall into winter rates at Wynn are totally off the board (due to remodeling I imagine).
Could that skew the Wynn data?

Unfortunately, I think you may find this an exercise in frustration because you are not likely to see any booking window patterns emerge. Unlike, say, a cruise ship where everyone checks-in and checks-out on the same dates, and the booking window is pretty consistent across market segments, in Vegas you are not going to see a bell curve where rates consistently peak or valley at X number of nights prior to a given date.

Vegas uses much more complex yield management strategies, and the major companies have entire departments where people spend 8 hours a day doing nothing but analyzing, setting and adjusting rates for each individual night for the next 3-6 months. Instead of looking at a fixed booking window, they generally look at the dynamic booking pace for each date (number of reservations booked daily for that date), as well as external factors that are often invisible to the public like private casino events, group rate contracts, fight/concert/event announcements, last minute convention cancellations, etc.

For multiple-night stays trying to predict a booking window is even more futile. Since each night's rate is set independently of the others, they can move in different amounts at different times, and sometimes in different directions.

Generally it's best just to book as far in advance as possible through a method that allows no-penalty cancellation so you can rebook if rates drop.

@chris you are very correct, this is an exercise in futility - to a point. regardless of how many teams of people work on pricing, they all have set rules, guidelines and algorithms they use to inform their decisions. our interest here isn't to decipher those rules, but instead track trends gleaned from data their rules put out.

based on the data we've looked at (two small sample sets) we are already seeing trends in how various corporations handle price adjustments for the same dates over time.

ideally the best scenario would be to scrape rates four times per day everyday for an entire fiscal quarter (or more). we would then know what time of day prices change (4pm pt), what days of the week are the best to look for pricing changes (tuesday), which weeks of the month (third) and how far out from the current date do the hotels start riding the fader on room rates (3 weeks).

there is knowledge to be found here, but the practical usage of which is yet to be determined.

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