Charting Unknown Waters: Hospitality Risk Management In A Volatile Era

Author: Avanti Joglekar

One glance at the news and it’s obvious that the world is rapidly changing in unexpected ways.  When the financial and political markets are turbulent, it’s harder than ever to avoid feeling anxious about the future. Global economic fluctuations, Brexit, a new presidential administration, oscillating transportation costs and oversaturation in the hotel industry have all contributed to the uncertainty that surrounds hospitality today.  

Complicating matters even further, over the past few years we’ve seen guest preferences drastically change.  How, where, and why people travel have all changed, resulting in a new mix of products and services.  Plus, newly emerging markets like AirBnB have made serious impacts on the hospitality industry.  What can your property anticipate, and how can you remain stable when everything around you is getting turned on its head?


Whether or not your property will feel the impact of the current market instability depends to a great extent on where you’re located.  If your property is located in a larger, ‘hub’ city, you’re more likely to experience volatility.  For the first time in years, available rooms have outpaced demand due to the recent construction boom.  As a result, the market oversaturation has driven ADR down among properties in larger cities.  

Oversaturation doesn’t just refer to too many hotel rooms.   Alternative lodging options, specifically AirBnB, have drastically impacted the hospitality industry.  Especially in larger cities, AirBnB has cut into hotels’ ability to increase rates by offering consumers lower priced options.  In fact, heavily attended events like sports games or entertainment aren’t as reliable for revenue generation as they used to be, since guests aren’t forced to choose just from hotels.

Currency exchange rates also impact tourism in larger cities.  If the dollar is strong, there’s less business from foreign tourists since they’ll have a less competitive exchange rate.  Larger cities, which depend on foreign visitors more than smaller ones, will in turn see fewer international guests.  If foreign currency continues to devalue as compared to the dollar, we’re bound to see less and less foreign visitors.



Trying to stay afloat in the midst of all these complicated issues can feel like an insurmountable task.  There are a few simple steps that you can take to smooth out the rough waters.  First, it’s important to avoid being reactive to shifting currents.  It’s best to focus on long term results instead of daily fluctuations.  Following and adapting to patterns that are revealed via a competent revenue management software suite is always preferable to dramatic shifts.

Since the state of hospitality is and most likely will remain changeable, it’s critical to have sophisticated and responsive revenue management software.  Using outdated, one-size-fits-all software won’t allow you to keep pace with data that changes on a daily, even hourly basis.  Relying solely on historical data isn’t going to generate reliable reports since the current and future climate of hospitality fluctuates so rapidly.  Software that’s optimized with advanced business intelligence tools will ensure that you’ll be able to anticipate and adjust to changes.


Uncertainty is a given, but our preparedness and ability to weather the storms are not.  When the financial and political markets are turbulent, it’s harder than ever to avoid anxiety about the future.  If we look to our recent past as an indicator of the future, we know that predicting what will happen next is more challenging than ever before.  That’s why it’s more critical than ever to have the right tools to guide your property towards success regardless of the turbulent times.

Learn how Rainmaker’s revenue optimization solutions can help you

Request a Free Assessment and Get Started Today!

Recent Posts