Compression Nights and Unconventional Wisdom
4/27/17
There are certain times of year—right around now, for example—in which the theatres are near-full with visitors and locals. Our friends in the hotel business have been experiencing the same good fortune and are near capacity with guests. They call them “compression nights.”
While the exact percentage of hotel occupancy that defines compression may be subject to debate, the concept is essentially that when a property’s (or even a city’s) occupancy rate rises above about 90%, it’s virtually a sold-out situation.
And the hotels don’t put a lot of extra effort into getting their occupancy up to 100%. Why is that?
The hoteliers know that discounting prices down to induce someone to stay over on a Sunday night (almost always the softest night) isn't worth the marketing costs. And discounting could negatively affect the other days of the week.
In other words, when a guest wants to arrive on a Friday and leave on a Sunday, forcing that customer to stay overnight on Sunday night may cost you the entire high-priced booking.
So when their automated yield management systems detect a compression day or week, the hotels raise their prices, rather than chase an elusive 100% occupancy. They know that there are worse things than having a couple of empty rooms. So on a compression day, 90% occupancy at higher rates may be better than 100% occupancy.
On Broadway, we always work hard to try and sell that last Saturday evening seat, spending marketing dollars and discounting to entice ticket buyers who may be on the fence. Even when we know in advance that a weekend is going to be popular (like this past Easter), we still put energy into selling every last ticket.
But maybe we should think about letting those last few seats go, keeping the prices up for in-demand performances, and focusing our attentions to worthier pursuits.
For more information, visit www.shubert.nyc.
While the exact percentage of hotel occupancy that defines compression may be subject to debate, the concept is essentially that when a property’s (or even a city’s) occupancy rate rises above about 90%, it’s virtually a sold-out situation.
And the hotels don’t put a lot of extra effort into getting their occupancy up to 100%. Why is that?
The hoteliers know that discounting prices down to induce someone to stay over on a Sunday night (almost always the softest night) isn't worth the marketing costs. And discounting could negatively affect the other days of the week.
In other words, when a guest wants to arrive on a Friday and leave on a Sunday, forcing that customer to stay overnight on Sunday night may cost you the entire high-priced booking.
So when their automated yield management systems detect a compression day or week, the hotels raise their prices, rather than chase an elusive 100% occupancy. They know that there are worse things than having a couple of empty rooms. So on a compression day, 90% occupancy at higher rates may be better than 100% occupancy.
On Broadway, we always work hard to try and sell that last Saturday evening seat, spending marketing dollars and discounting to entice ticket buyers who may be on the fence. Even when we know in advance that a weekend is going to be popular (like this past Easter), we still put energy into selling every last ticket.
But maybe we should think about letting those last few seats go, keeping the prices up for in-demand performances, and focusing our attentions to worthier pursuits.
For more information, visit www.shubert.nyc.
Originally published in Broadway Briefing.