Start with revenue management
Revenue management is the science and practice of price discrimination — charging different prices for the same product. It applies best to fixed-capacity products that spoil if unused: an empty rental night, like an empty hotel room or airline seat, is gone forever once the day passes, unlike a bike shop that simply re-shelves unsold inventory. Setting the optimal price takes two steps — forecast demand, then set the price.
The empty room at night is spoiled inventory, and the property manager cannot store it for sale later. It is gone forever.
The forecasting challenge
Events like COVID-19 are hard precisely because they break forecasting, which relies on past patterns repeating. Lockdowns, stay-at-home orders, curfews, and quarantines hit different states and counties at different times, with regional seasonal waves on top — so the usual assumption that this year resembles last year’s seasonal pattern doesn’t hold, and those unusual patterns likely won’t repeat.
Use the data anyway
It’s tempting to discard the affected data and price manually, but abnormal data still tells a story if you know the context. Comparing January 2021 and 2022, at the December 16 snapshot the current year was running 6 occupancy points ahead of the prior year, implying a ~60% January forecast — both good signs. The catch: January 2021 occurred during a COVID case peak (cases peaked January 12), so the prior-year baseline was suppressed, which made 2022 look strong.
Mind the gap
The occupancy gap — the year-over-year difference at the same point in time — sat at +5 to +7 points from mid-December to January 6, signaling stronger demand. Then Omicron drove cases up sharply from December 19, and within two weeks the gap collapsed to −1, a negative correlation with new cases as travel confidence eroded and cancellations rose.
Reacting to the data
A closing occupancy gap is the signal to act, and price is the most direct lever: with ADR running higher year-over-year, the manager could sacrifice that ADR gap by lowering rates, ease minimum-night-stay restrictions, or run a marketing push for January. Timeliness is everything — Quibble provides real-time Occupancy, ADR, Revenue, and RevPAR forecasts that update on streaming reservation data, so analysts learn the moment a forecast drops.
Forecast-based RM gets criticized for not adapting to demand shocks, and COVID did disrupt seasonal patterns. But even across two pandemic-affected Januaries, the science and principles of revenue management still guided the right decisions — provided the analyst understood the context behind the numbers.