Case Study: The Strategic Advantage of RMS in a Last-Minute Hotel Booking Market

Background

This is not theory, this is a real case based on my recent experience.

Without question, traveler behavior has shifted dramatically. While advance bookings were once the norm, today’s guests, especially younger generations in urban and leisure markets, are booking at the very last minute. No need to guess; just look at what happens during summer peak periods.

OTA data confirms the trend: in many European destinations,over 40% of bookings are made within 7 days of arrival, with a substantial portion within just 48 hours.

In early August this year, I observed top hotels starting with an OTB (on-the-books) occupancy of49% and jumping to 85% in just two weeks, over 100 bookings picked up in that short period.

For hotels, this shift creates both risk and opportunity: without a system that reacts in real time, they either lose revenue by underpricing or lose occupancy by overpricing.

The Hotel

• Property: Boutique Hotel (30 rooms)
• Location: Urban / City, popular with weekend travelers and international tourists
• Main Market Segment: Transient and Groups (definition of Transient and Group markets by USALI standards)

Previous Practice:

• Rates set manually once or twice per year, with occasional adjustments during high-demand events.
• Lead time or booking windows are largely ignored.
• Weekend pricing applied as flat markups.

The Problem

1. Last-Minute Price Mismatches

• Peak weekends sold out early at low rates, missing potential yield.
• Weekdays overpriced when occupancy lagged, leaving rooms unsold.
• Discounts triggered by OTA “mobile” or “last-minute” campaigns, without analyzing real pickup trends.

2. No Lead Time Sensitivity

• Rates didn’t adjust based on when guests booked.
• Last-minute discounts were often applied too late or inconsistently.

The RMS Implementation

The hotel adopted a cloud-based Revenue Management System capable of:

• Dynamic Pricing: Adjusting rates multiple times per day based on real-time occupancy, competitor rates, and demand signals.
• Lead Time Adjustment: Automatically modifying rates according to booking window patterns, optimizing for short, medium, and long lead times.
• Occupancy-Driven Yielding: Scaling rates once key occupancy thresholds were reached (e.g., 60%, 80%, 90%), factoring in LOS (length of stay) to refine pricing even further.

Key RMS Features in Action

1. Price Dynamic Based on Occupancy
Example: On a Friday afternoon, with 12 unsold rooms for Saturday, the RMS detected strong same-day search volumes and competitor sell-outs. Instead of discounting, rates were increased by12%, resulting in a full sell-out at a higher ADR.
(Yes, some may see this as risky, but the data strongly justified the move!)

2. Lead Time Adjustment Functionality
Analysis showed that bookings within 3 days of arrival had 25% higher willingness to pay. Rates were automatically increased for these short-lead reservations, while strategic discounts were applied for longer-lead midweek stays to secure base occupancy.

3. Market-Responsive Rate Updates
Rates were adjusted up to five times per day in response to sudden demand spikes, such as a festival announcement or favorable weather driving weekend stays.
(Tip: Even with automation, manual oversight is key, don’t depend 100% on autopilot., so your input is a must!!

Results After 6 Months / Yearly Comparison

Key Takeaways

• Dynamic pricing is essential,manual updates can’t keep up with last-minute booking trends.
• Lead time adjustments ensure rates matchwhen guests book, not just when they stay.
• Occupancy-based yielding captures maximum value, raising rates in high demand and filling rooms when demand is soft.

Conclusion

With last-minute bookings now dominating the hotel market,RMS technology has shifted from a competitive advantage to a core operational necessity. The ability to instantly align pricing with real-time demand, occupancy, and booking windows is no longer optional, it is the difference between underperformance and market leadership.PLease make sure your RMS is connected with your PMS!!! and not CHM or CRS!! Read the previous post Why RMS must be connected with PMS.

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Would you like to talk about Hotel Process optimization? Meet Sergio for a 30 minutes chat

https://calendly.com/sergio-foti/30min

Sergio Foti, MSc, CHIA
Certified Hotel Industry Analytic
Director

Medvedova cesta 28
1000 Ljubljana, Slovenia

M +386 (0) 41 827 070
T +386 (0) 1620 9767

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