The Booking Velocity Method��
A RevProf Course
Pick up refers to the number of reservations or bookings made within a specific time frame. It's a measure of how many rooms or rental units have been booked out of the total available.
Usage: This metric is often used to track the performance of a property over a certain period, such as daily, weekly, or monthly. For instance, if a hotel has 100 rooms and 20 of them get booked over the weekend, the pick up for that weekend is 20 rooms.
Importance: Understanding pick up helps revenue managers adjust pricing and promotional strategies. If pick up is low, it might indicate a need for more aggressive marketing or pricing adjustments. Conversely, high pick up might suggest the opportunity to increase rates
Booking velocity refers to the rate at which bookings are made for a future period. It's an indicator of how quickly inventory (rooms or rental units) is being reserved for future dates.
Usage: This metric is often analyzed in the context of lead time (how far in advance bookings are made). For example, if a large number of bookings are made three months in advance for a particular month, the booking velocity for that month, at that lead time, is considered high.
Importance: Booking velocity is crucial for forecasting demand and revenue. High booking velocity well in advance might indicate strong demand, allowing for higher pricing. Conversely, slow booking velocity might signal a need for promotional activities to boost demand.
Pacing compares current bookings for a future period with those at the same point in the past. It measures how bookings for a specific date or period stack up against historical data.
Usage: Used to assess booking trends against past performance. For instance, if a hotel has a higher percentage of rooms booked for August this year compared to the same date last year, it indicates positive pacing.
Importance: Essential for forecasting and strategic planning. Pacing informs whether current performance is better, equal, or worse than previous years, guiding pricing and marketing decisions.
Comparing Metrics
Metric | Definition | Focus | Use in Revenue Management | Key Consideration | Forward/Backward Looking | Stay Date Specific | Booking Date Specific | Key Differences |
Booking Velocity | Rate at which reservations are made over a certain period. | Immediate/Short-term trends | Assessing immediate demand; guiding dynamic pricing and promotional efforts. | Current trend, not comparative. | Forward Looking | Can be Specific or Agnostic | Booking Date Specific | Focuses on the current rate of reservations without comparison to past data. Primarily concerned with immediate booking trends. |
Pace | Comparison of current bookings for a future period against a past period. | Long-term planning and forecasting | Setting benchmarks for future performance; understanding whether goals are on track. | Inherently comparative; historical analysis. | Both (primarily backward) | Stay Date Specific | Booking Date Agnostic | Involves a historical comparison to assess whether current trends are in line with past performance. Used for long-term planning. |
Pick-Up Rate | Number of rooms booked from the current date to the arrival date. | Short-term booking accumulation | Informing both operational and strategic decisions; demand forecasting; adjusting pricing and marketing strategies. | Focus on short-term booking accumulation; immediate strategy effectiveness. | Forward Looking | Stay Date Specific | Booking Date Specific | Measures the accumulation of bookings over a short period, providing immediate insights for operational and strategic adjustments. |
Key Differences
Timeframe and Focus: Booking velocity is about the rate of bookings for future dates, focusing on how quickly a property is being booked. Pick up, on the other hand, is about the total number of bookings made within a specific period, regardless of when the stay is.
Dynamic vs. Cumulative Measure: Booking velocity is a dynamic measure reflecting current booking trends, while pick up is a cumulative measure over a set period.
Forward-Looking vs. Current/Historical Analysis: Booking velocity is more forward-looking, providing insights into future demand. Pick up offers a snapshot of current or historical booking accumulation, useful for comparing with past performance.
Slicing the Data
Why do we group inventory?
Binary vs Fractional Inventory
Binary
Binary inventory refers to a classification system where items or units are either completely available or completely unavailable, with no intermediate states. In the context of the VR/STR industry, this means a property (like a home or apartment) is either fully booked (100% occupancy) or entirely unoccupied (0% occupancy) for a given time period.
Fractional
Fractional inventory is a classification system used to describe items or units that can be partially occupied or utilized. A hotel with multiple rooms can have a fractional occupancy rate, indicating that a certain percentage of rooms are occupied at any given time. Each individual room or unit within a larger property can be booked independently, leading to various occupancy levels (e.g., 50% occupancy, 75% occupancy) rather than a simple binary state.
How to Calculate Fractional Occupancy with Binary Inventory
Group by Dates
By aggregating dates into ranges, we are able to calculate single-home monthly, seasonal or yearly occupancy.
Group by Like-Inventory
By aggregating groups of homes, we are able to calculate single date occupancy. Which allows us to establish trends in the market to customize our approach.
Why examine individual units then?
Groupings vs. Individual
Due to the binary nature of a single home, we use groupings of homes to aggregate metrics to establish trends, similar to how hotels group room types. We also group date ranges together. In aggregation of either date ranges or home groupings, we are able to calculate the fractional metrics.
Very often, especially in larger portfolios, homes are grouped to calculate occupancy, ADR and RevPAR. Likewise, extending date ranges for metric measurement also dilutes the quality of single day measurement. However, due to the highly nuanced inventory, they will never be an exact duplication of the group they are aligned with.
Just like each date within a range has its own value, each home has its own characteristics and will inherently perform differently than that of the group.
“My neighbor is selling their home that is just like mine for $100 MORE a night!”
After you kindly explain the difference between advertised rates vs. booked rates, occupancy vs. ADR….
Is the neighbors’ home REALLY the same?!?!
Inventory Differentiators
Design
Size
Layout
Décor
Sleep Count
Amenities
Location
Channel Distribution
Review Score
Review Sentiment
Page Views
Conversion Rate
Pricing Nuances
Fees
Policies
Owner Relationship
Promotional Eligibility/ Opt-in
Photo Ordering
Photo Quality
Listing Content
Marketing Strategy
Unique Selling Points (USPs)
Direct Booking Strategy
RANKING
Inventory Differentiators
Design
Size
Layout
Décor
Sleep Count
Amenities
Location
Channel Distribution
Review Score
Review Sentiment
Page Views
Conversion Rate
Pricing Nuances
Fees
Policies
Owner Relationship
Promotional Eligibility/ Opt-in
Photo Ordering
Photo Quality
Listing Content
Marketing Strategy
Unique Selling Points (USPs)
Direct Booking Strategy
RANKING
What does this have to do with Booking Velocity?
What does this have to do with Booking Velocity?
Everything!
Booking velocity is the rate at which a specific property gets reserved over a given period. It's a crucial metric because OTAs love fast-selling properties—they make them money quickly. High booking velocity can improve your listing’s rank on OTA platforms.
Each unit you list on an OTA has its own potential and challenges. Understanding the booking velocity of individual units enables you to adjust your pricing and promotional strategies to maximize revenue.
The OTA “flywheel”: What is it?
The OTA Flywheel is essentially a virtuous cycle. High-performing properties get better visibility, which in turn generates more bookings, pushing the property even higher in rankings. Booking velocity, plays a crucial role in this cycle. I often refer to this as the “snowball effect”.
Conversely, if a listing is “stale” for some time, it will be pushed down the ranks
= LESS visibility
=LESS bookings
=Even lower rank
=Even LESS Bookings
When Booking Velocity is High
There is likely room to raise your rates AND keep booking
Alternatively, you could also consider throttling back on promotions, increasing restrictions/ other non-pricing levers
When Booking Velocity is Low
Check your rates, fees, reviews, photos…
Alternatively, you could also consider adding value-adds instead of lowering price to aid in conversion, or applying promotions
Additional considerations: �Channel mix matters
Disproportionate booking velocity on one channel vs. the other:
This could be highly beneficial for one channel, pushing your rankings up.
However, could be simultaneously detrimental to another channel, pushing your rankings down + displaying limited availability, which we know to be a driver for rankings.
No availability = No page views/CTR
No page views = No conversions
No conversions = lower ranking
How do I determine a healthy Booking Velocity?
Let’s work through some scenarios…
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Let’s work through some scenarios…
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Let’s work through some scenarios…
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Static thresholds cannot be provided as they are relative to many conditions. For one market receiving 12 bookings in a week might be normal, but another market, detrimental and indicating an underprice.��
Continuous monitoring and tracking
Monitor changes. It is very finicky! I have seen a 15% decrease in ADR be the genesis for the entire calendar filling up a year out, with a previously “stale” listing.
Create a special report that tracks #of bookings (or booked nights if you prefer) in a designated time range (ex 7 days or 14 days if your inventory allows. Work from the bottom up and the top down each week (or as needed).
Glossary
Binary Inventory: Binary inventory refers to a classification system where items or units are either completely available or completely unavailable, with no intermediate states. In the context of the vacation rental industry, this means a property (like a home or apartment) is either fully booked (100% occupancy) or entirely unoccupied (0% occupancy) for a given time period. This all-or-nothing approach simplifies booking and occupancy management but doesn't allow for partial occupancy or room-level granularity in bookings.
Booking Velocity (or Booking Speed): Booking velocity refers to the rate at which bookings are made over a specific period. It is a more immediate or real-time metric that indicates how quickly rooms are being filled for a certain future period, without necessarily making a direct comparison to past data. High booking velocity might indicate a surge in demand, prompting the need for adjustments in pricing strategies or promotional activities.
Fractional Inventory: Fractional inventory is a classification system used to describe items or units that can be partially occupied or utilized. In the hotel industry, this concept is applied to the occupancy of hotel rooms. A hotel with multiple rooms can have a fractional occupancy rate, indicating that a certain percentage of rooms are occupied at any given time. This system allows for more detailed and dynamic management of inventory, as each individual room or unit within a larger property can be booked independently, leading to various occupancy levels (e.g., 50% occupancy, 75% occupancy) rather than a simple binary state.
Forward/Backward Looking Metrics: Indicates whether the metric is primarily used to analyze future trends (forward-looking) or to compare current data with past performance (backward-looking).
Pace: Pace is a metric used to compare the current rate of bookings for a future period against a similar past period. Essentially, it's a comparative measure. For example, a hotel might compare the current booking pace for the upcoming summer season against the booking pace for the same period last year. This comparison helps in understanding whether the hotel is ahead, on track, or behind in terms of expected occupancy. Pace is crucial for forecasting and helps in making strategic decisions about pricing, marketing, and inventory management.
Pace Report: This report measures the number of rooms sold and compares it with previous periods. It's useful for forecasting demand and adjusting pricing strategies accordingly.
Demand Forecasting: This involves predicting future room demand based on various factors, including historical data, current booking trends, and market conditions. Booking velocity is a key component of this process.
Pick-up Rate: This term is used to describe the rate at which reservations are made for a particular period from a specific point in time. It's a measure of how quickly inventory is being sold.
Lead Time: This metric refers to the amount of time between when a reservation is made and the actual stay date. It's closely related to booking velocity, as a higher booking velocity might indicate a shorter lead time and vice versa.