Seasonality is a determining factor in the tourism industry, as businesses are faced with the challenge of managing social, financial and environmental pressures. Seasonality causes a peak in demand throughout various times throughout the year. Climate change, big events and national holidays are some of the main factors that influence seasonality. These elements can have a positive or negative impact on the tourism industry depending on how they are managed.

How seasonality in Barcelona affects your holiday rental revenue?

Before we begin looking into the many strategies that can be utilised to thrive in an industry affected by strong seasonality like the tourism industry, we’re going to take a close look at the negative impacts of seasonality for property owners in Barcelona.

To balance the fluctuations in demand, businesses and property owners must set higher rates during high season to maximise profits and lower rates in the low season to generate a higher demand and sustain the costs throughout the season. Despite this sounding very simple, seasonality is extremely unpredictable and many property owners fail to truly maximise their profits.

The most significant impact of seasonality affects the industry from a financial perspective. Seasonality can discourage business investors and as a result of a short-lasting high season can significantly impact the owners return on investment. Moreover, there is often the risk under and over utilising resources which can lead to inefficiencies and loss of profits. It is therefore fundamental for property owners to cover all overhead costs during the season’s peak.

What strategy should you adopt to approach seasonality?

Old approach  

For many years, the most common practice to boost revenue in the tourism industry has been the ‘Block approach’ which separates the year in 4 seasons and sets a fixed price for every day within the block. However, this system is by no means the most effective as does not take in consideration variations within the time frames and will result in many missed opportunities.

New strategies

Over the past year’s, new revenue management strategies have emerged and have been widely adopted, by apartment management companies, top hotels and international chains, as a result of their success and you should consider them.

Managing effectively each channel of your business is crucial when choosing a strategy to maximise your revenue. Good channel management allows you to achieve higher net profit, from every booking by closely and analysing the type of customer, their needs and spending patterns to always set the most convenient price. Analysing a large database can be a tedious and time-consuming task for a channel manager. Therefore, adopting new technology such as IT analytics tools can be a managers’ most effective resource to spot trends and support strategic decision making.

Price fencing is another great strategy to optimise revenue which had been successfully used by airline companies and has recently seen a shift in the hospitality industry. Fences are conditions that must be met in order to apply a certain rate or discount. These conditions can vary according to demand, geographic area, distribution channel, inventory levels and promotional campaigns. Even though this may seem complicated, it can easily be managed with the aid of IT systems and tool.

A further strategy which is extremely profitable is to carefully identify each customer group and their spending patterns. This way it is possible to target specific groups at specific times in order to maximise returns. For example, during the Mobile World Congress here in Barcelona not only prices reach the season’s peak, but we are also able to make the most out of this period by charging higher process for breakfast or employ more staff to cope with the sudden surge in demand.

Overall regardless of the size of your hotel, business or even apartment revenue management strategies can always be adopted not only to maximise revenue throughout the ups and downs for the season but also to minimise all unnecessary costs and ultimately transform seasonality from threat to competitive advantage.

Download our guide to find out What Factors Influence Demand in Barcelona.