Optimization Settings

Consider using the following optional settings:

• Cancel/Re-Book Percentage: allows G3 RMS to consider revenue losses from a price reduction, when guests cancel their reservations and re-book at a lower rate.

• Price Drop Restrictions: controls price drops close to the arrival date if you prefer avoiding price drops over maximizing revenues.

• Optimization Method 2: applies if you want G3 RMS not only to inform you of arrival dates with LRA impact but also to close temporarily BAR availability for those dates.

To see the history of changes, such as who updated the settings and when, click export .

Cancel/Re-book Percentage

Enable the Cancel/Re-book Percentage option if you want G3 RMS to consider revenue losses from a price reduction, when guests cancel their reservations and re-book at a lower rate.

By default, when G3 RMS determines pricing, it doesn't expect that guests cancel and re-book if the price drops. The system drops the price if that brings more revenue overall. When you enter a cancel/re-book percentage value, G3 RMS compares the rewards against the risks of lowering prices:

• Reward: based on the expected remaining demand for each price point, how much more revenue you gain from a price drop.
• Risk: based on the cancel/re-book percentage, how much revenue you lose from existing On Books business.

G3 RMS considers those factors in its optimization and selects the optimal price. It only drops the price if the rewards outweigh the risks.

Setup Steps

1. Click , then Property, and then Property Specific.
2. Click the Optimization Settings tab.
3. Enter a percentage value in the Cancel/re-book percentage field.
4. Click Save.

Best Practices

Enable the functionality if:

• You are concerned that you lose revenue because your guests cancel and re-book after price reductions.
• You don't think you lose revenue, but you are concerned that pricing gets lower as the arrival date gets closer. For example, some clients set a strategic high percentage to avoid "educating" consumers that the longer they wait to book the reservation, the lower the price.

Determine the optimal value

G3 RMS doesn't collect any personal information from reservations. Therefore, it can't track which or how many guests cancel and re-book. You could track such information by comparing cancellations against new reservations for a given booking date. Or you might have this information available from a frequent guest program.

The value is meant to be an estimate. We recommend that you start with a low value, for example 5% or 10%. Or, if available, base the value on actual cancel and re-book data.Then observe the impact on the number of pricing reductions for a period. Compare that to what you observed before the change. If price reductions don't decrease enough, increase the amount by 5% and observe again. Continue until you find an acceptable level.

Note: 

• When the Cancel/Re-book feature is enabled, the system considers revenue losses only for some market segments, those that you attributed as "Unqualified" or "Linked to BAR."
• Early in the booking curve, this feature has little impact on price reductions. That's because, with little or no business on books, there is no business that can cancel.

Price Drop Restrictions

Use this optional functionality to control price drops close to the arrival date. You define conditions, for example a minimum revenue gain. The conditions need to be met before G3 RMS can lower a pricing decision. If you use this functionality, you tell the system that, for the defined conditions, you prefer avoiding price drops over maximizing revenues. This might be the case because you have business rules to prevent price drops close to arrival.

Note:

• The price drop restrictions apply to the Primary Priced Product Main pricing decision that G3 RMS optimizes. Usually this is the lowest non-restricted product with flexible cancellation policy that anyone can book. The default name is Best Available Rate (BAR), but you can change it in Pricing Configuration. and, if used, to Independent Products.

• If price drop restrictions conflict with Competitive Market Constraints, G3 RMS ignores the constraints.

Setup Steps

1. Click , then Property, and then Property Specific.

2. Click the Optimization Settings tab.

3. Select Enable Price Drop Restrictions.

4. All days of week are checked. Clear any day for which you don't want to apply the price drop restriction.

5. Enter the number of Days to Arrival in the Value field to apply it to each day of the week.

6. Press the Tab key to go to each day of the week and to change values, if needed.

7. Enter the values for the Revenue Threshold For Price. Select a fixed value or a percentage.

8. Enter the values for the Maximum Price Drop. Select a fixed value or a percentage.

9. Click Save.

10. If needed, click to add Seasons when the values differ from the Defaults.

Data Details

Detail	Description
Days to Arrival	Number of days prior to arrival within which G3 RMS must consider the revenue threshold. The value is for today and the number of days you enter. For example, you enter 2 in the Days To Arrival value for Monday. G3 RMS considers the threshold for the preceding Saturday, Sunday, and Monday. If the arrival date is February 3, the system considers the threshold for February 1, 2, and 3.
Revenue Threshold For Price	Minimum forecasted revenue gain that you require before G3 RMS can reduce the price. For example, if you select 1% and G3 RMS forecasts 100,000 total revenue for this occupancy date, then a price drop only occurs if it increases the revenue forecast by 1,000.
Maximum Price Drop	The highest value that you allow the price to drop, if the two other conditions are met. ​

Best Practices

Match business rules

Some clients don't allow price drops close to arrival. Use the functionality to enforce such strict rules.

Manage impact of upgrading

Some clients balance room types prior to the arrival date by upgrading reservations. If such upgrading results in higher-priced room types becoming sold out and lower-priced room types becoming available, then G3 RMS might reduce pricing. Let's say that your property balances inventory two days prior to arrival and wants to avoid any resulting price drops. In that case, enable the restrictions, set the Days to Arrival to 2 and the Maximum Price Drop to zero.

Manage impact of group wash

Another scenario might be that you want to avoid price drops due to group wash, for example on cut off day. Before setting up Price Drop Restrictions, make sure that you follow a consistent process for loading groups. If you load group consistently, wash forecasts improve. That means that G3 RMS can better predict when and how much groups wash and will drop price less often.

Set restrictions only close to arrival

Each time your defined restrictions prevent a price drop, you accept a possible revenue loss, up to the amount of your Revenue Threshold For Price. The higher you set the Days to Arrival value, the larger the possible losses.

Optimization Method 2

This alternative optimization method is not beneficial for most clients and the module is not visible by default. IDeaS contacts clients that may benefit from this feature to discuss the considerations. Optimization Method 2 only applies if you want G3 RMS not only to inform you of arrival dates with LRA impact but also to close temporarily BAR availability for those dates.

For more information on LRA impact and the available LRA options, see Last Room Availability (LRA).

Setup Steps

1. Click .
2. In the Property section, click Property Specific.
3. Click Optimization Settings.
4. Select Enable for Optimization Method 2.
5. Click Save.

Best Practices

• Compared to the default optimization, Optimization Method 2 is better at considering when different types of future remaining demand book. Thus, with regards to LRA, G3 RMS can better react to dates when it forecasts that the remaining demand for low-value LRA business will book earlier than high-value BAR business and will potentially displace that high-value BAR business. In the case, this method should lead to better decisions and higher revenues.
• Optimization Method 2 leads to less stable decisions, meaning that the system’s decisions change much more frequently in between optimizations. These changes are partly due to the increased complexity from considering when different types of remaining demand book, but also because this model explicitly plans to implement different pricing approaches over the booking period for each arrival date. More frequent decision changes may make monitoring G3 RMS more time consuming.
• When Optimization Method 2 is enabled, remaining demand values may no longer be aligned with the occupancy forecast. Due to the differences in how remaining demand and expected occupancy are calculated in Method 2, on-books plus remaining demand can sometimes be less than the occupancy forecast.
• Consider when your LRA business typically books versus when your BAR business books. If both have similar booking windows, then the ability of Optimization Method 2 to better react to dates with LRA impact may be outweighed by its disadvantages. Consider this method if LRA business usually books earlier than BAR business.