Monday's Reflection in Revenue

Happy Monday and hopefully beautiful blue skies for you today. As we start the week I reflect on recent gas prices.

Yes that’s right, the gas prices. Odd for a revenue management blog right, but bear with me a moment.

Consider the recent pricing and how they jumped so quickly to where they are now.

Speculation and fear ‘shocked’ the market and propelled the oil and gas prices upward in only mere days!

We are used to market shocks pushing inflation based on over demand, but the market can also be shocked the opposite direction as well pushing down market demand and enticing the market to come down in price. In the hospitality industry, we have all been pretty accustomed to the market shocks pushing inflation in our markets.

Super Bowls, World Cups, Olympic Games, World Series are all various types of market shocks. Ones that create unnatural mostly unrepeatable (or

uncontrolled) leaps in demand.

And we’ve come up with pretty good ideas on how to take advantage of these and maximize their impacts. And of course best of all we can plan for these shocks since most of these events tend to be scheduled months if not years in advance.

But how often do we consider market shocks the opposite direction? With the pandemic and the openings, closings, and changings in conditions we’ve definitely seen those downward shocks. For us in Playa del Carmen, we’ve seen market shocks for reasons beyond the pandemic. For example the beginning of the war depressed local demand temporarily, each wave of the pandemic, or now the arrival of heavy seaweed.

Those downward shocks require planning. But how do you plan for a sudden shock, like the several we’ve faced during the pandemic and even this recovery phase. Well honestly you can’t.

That’s the important part to realize first. You can’t plan for it, you can’t perfectly protect from it. So many damaging first steps start from trying to control what cannot be. You cannot let the storm control you! Instead, there are two most important steps. Have your plan (aka forecast/budget) for the year (month/day), and stick to it as much as possible. Don’t just give in that it’s not possible. Second, think outside the box in more unusual strategies to consider, other competitors, etc. Is it likely the results wont match your initial ‘gameplan’, yes, but the more priority you place in staying on your plan the better you will do at not deviating further from your plan than necessary. Treat the market downturn the same as you would if it had been pre-forecasted months in advance and find ways to make the current market fit your plans (aka forecast).

Wild swings and sudden shifts in strategy rarely result in successful outcomes in many cases. Connect with us again later this week for our next Reflection In Revenue.