What pricing strategy should you adopt for the 2024 Olympic Games?

Exceptional event exceptional pricing? You have been many to ask us about the pricing strategy to implement for the 2024 Olympic Games. Should hotels apply exceptional rates during this period? Here are some key insights to help you best approach this event and optimize your revenue management strategy.

What if there were not that many people after all?

If nearly 3 billion people will be watching the Olympic Games, how many will actually come to Paris? Intuitively and we have also played the exercise internally at Revbell by individually estimating demand, one might expect between 5 and 10 times more demand than in a normal year.

However forecasts from the Paris Convention and Visitors Bureau indicate activity slightly above 2019 levels. The reason is that tourists who are only interested in visiting Paris will choose another year to travel to the capital. There is therefore a form of tourist substitution effect.

In addition, the partnership between the Olympic Games and Airbnb will significantly increase supply. More supply combined with demand only slightly above 2019 levels does not support high prices as good yielders would expect. In fact a quick look at the Airbnb platform already shows a large number of apartments available at very reasonable rates. And if they are visible it means they have not yet been booked. So either demand is not there or prices are too high…

Start with a non refundable non changeable strategy

Before talking about pricing it is essential to talk about cancellation policies.

Many hotels will see the 2024 Olympic Games as a golden opportunity, set very high rates, fail to sell and then drop prices at the last minute. We already observed this during the 2016 UEFA European Championship.

If you sell flexible rates you take the risk of seeing guests cancel at the last minute to book with a cheaper competitor.

In such an uncertain context prioritizing non refundable and non changeable rates is a particularly relevant revenue management strategy.

Keep OTAs if you are not a major hotel player

This may sound paradoxical as we all want to drive direct bookings and save on commissions.

However, if we assume there will be a high level of supply during the 2024 Olympic Games, guests will not need to search long to find an attractive rate: Booking, Expedia or Airbnb will be more than enough.

This customer base will be different from your usual clientele, especially your corporate segment.

Therefore, if you are 70% dependent on Booking and Expedia you should not close these distribution channels. And even if only 25% of your bookings usually come from OTAs, take a closer look at your July and August performance, the OTA share may be significantly higher.

Unless you belong to a major hotel chain, it is important to stay realistic and use OTAs as a visibility and distribution lever.

Only put a limited number of rooms on sale and restock

To avoid seeing your inventory sell out too quickly at a rate that may ultimately turn out to be too low, we recommend opening sales for a limited number of rooms (for example 5) across the entire event.

You can then observe market behaviour in the following weeks: are certain dates selling faster than others? Should prices be adjusted?

The objective is above all to gauge the market in order to progressively refine your pricing strategy for the 2024 Olympic Games.

Use minimum stay restrictions to ensure optimal occupancy

Depending on the occupancy observed, the peaks and troughs in demand that will start to emerge by day, it may be relevant to implement minimum length of stay restrictions (minimum stay of 2 or 3 nights).

This strategy helps smooth occupancy and improve RevPAR across the entire period.

You could start directly with minimum stay restrictions but this would not protect you from demand peaks and would not allow you to measure the natural market demand.

Leave group business to the others

Groups will create gaps in your booking schedule.

They require firm rates several months before the start of the 2024 Olympic Games, while also often requesting specific cancellation terms.

You should therefore leave this segment to properties that specialise in group business.

This will allow you to focus on individual demand, which is generally more flexible more profitable and much easier to manage from a revenue management perspective.

Adopt a reasonable pricing strategy

If you limit your sales to 5 rooms on OTAs, or if you are able to implement a process to closely monitor bookings, the risk of starting with a price that is too low is controlled. At worst you will have sold a few rooms slightly below the market potential.

We deliberately refer to a price that is not high enough rather than a price that is too low, as the idea is neither to start with discounted rates nor to multiply your prices by ten.

Compare your usual end of July prices with those applied during the Paris Air Show. Are you closer to x2 or x3?

Also look at your weekly RevPAR, which combines occupancy and average rate achieved. The reality is sometimes very different from the simple displayed price.

We all tend to focus on the rates visible on booking channels, while actual realised rates are often very different especially when prices are dropped at the last minute.

Keep in mind that for the Paris Air Show, it is mainly companies that fund travel rather than individuals.

However, the Paris Air Show remains a period of very strong demand and is therefore an excellent benchmark for building your pricing strategy for the 2024 Olympic Games.

With this in mind adopting pricing levels similar to those of the Paris Air Show seems to be a consistent approach, provided you rely on actual achieved rates rather than on the prices you initially expected to sell.

At worst, you can increase them after the first five rooms are sold.

Happy pricing strategy to all!

Keywords: OTA Hospitality Revenue Management CRM pricing RMS PMS hotel direct bookings OTA hospitality.