Mastering Hotel Pricing: A Strategic Guide to Optimization and Revenue Growth
What is hotel pricing? Hotel pricing is the method by which you optimise your property’s rates to maximise both occupancy and revenue. Providing guests with value for money while trying to maintain a stable bottom line and avoid being undercut by competitors is a complex task that needs constant attention if your business is to succeed. Hoteliers need to stay proactive when it comes to pricing their rooms. Capturing real-time data and following current market trends, along with your own business trends, is vital for maintaining an optimal pricing model for your hotel. Adjusting your rates and managing the revenue you win from bookings cannot be viewed as a set and forget practice. This blog will help explain everything you need to know about hotel pricing and give you helpful information on strategies to use at your property. *Looking for Real Estate Dekho’s pricing page instead? Click here to view your options How does hotel pricing work? Hotel pricing is determined by the basic principle of supply and demand. During peak seasons or events, when demand is high, prices tend to rise. Conversely, during off-peak times, prices might be lowered to attract more guests. However, it’s not just about seasonal fluctuations. Hotels must also consider factors like: Hotel pricing is a delicate balance of strategy, market research, and guest expectations, all aimed at achieving optimal occupancy and revenue. With the advent of new automation and technology, many hotels now employ revenue management software (such as Real Estate Dekho) that use algorithms to adjust room rates in real-time, maximising revenue potential. Get your price right and win Optimise your hotel’s pricing strategy while also reducing your workload with Real Estate Dekho‘s smart hotel platform.Learn more Real Estate Dekho Product/service 🏠 Your Ultimate Destination for SalesOne-Day, and Rental Property Listings!📞 954-989-9621 Understanding room pricing at your hotel Revenue management and room pricing can become very complex, very quickly. When you aren’t a professional revenue manager it can seem overwhelming. The temptation to look no further than the simple room pricing you’re already employing may be hard to resist. The skills required tend to transcend many areas including technology, customer service, finance, and more so it can be very hard to feel like you’re covering all the bases and staying on top of your pricing. Prices can change not just every day but sometimes every hour depending on demand. This is the kind of agility revenue managers are faced with achieving. Pricing your hotel rooms is about getting the most revenue possible out of each individual room. Don’t think about what the room is worth; think about how much value you can get out of it – the guest will often be prepared to pay more money than the flat-rate if they sense an opportunity to get a little extra benefit. Occupancy also plays a role in the way you price your rooms. After all, an unsold room achieves nothing so pricing your rooms to maximise occupancy can often be a better tactic than pricing rooms to maximise profit on them individually. In a highly competitive location, it’s sometimes necessary to lure guests in with lower rates. At least then you have the guests and your competitors don’t. You can then find ways to gain more revenue from the guests through other services offered at the hotel. Every hotel has its own unique room pricing considerations depending on: Unfortunately there’s no one-size-fits-all, so the advice offered in this blog should be adapted as you see fit to your specific business. Listen to this blog about hotel pricing in an engaging podcast format: Hotel pricing compliance to follow As with all things in the hotel business, there are many compliance expectations to follow, depending on local legislation, as well as the rules imposed by having listings on different booking channels. It’s impossible to have a prescriptive list of “Things You Must Do”, but there are some consistent regulations that also work as best practice. This includes: Rate parity deserves a special mention as well, as this is a requirement for many OTAs and is generally considered a norm for the industry. No matter where a room is listed, guests should find that it is the same standard price. Rate parity allows guests to trust that they are always getting the best deal possible, improving long-term guests loyalty and encouraging guests to book directly with you (i.e. they don’t go shopping around on OTAs thinking they can get a better deal). Real Estate Dekho Product/service 🏠 Your Ultimate Destination for SalesOne-Day, and Rental Property Listings!📞 954-989-9621 Establishing a hotel pricing strategy Crafting and executing your hotel pricing strategy requires you to do more than establish rates for your rooms during particular seasons. You’ll want to go beyond that – optimising your pricing strategy so that you maximise the revenue that you generate per room and per guest. There are a number of questions that should surround your pricing strategies: Let’s take the first question as an example. Certain guests will prefer or be accustomed to particular pricing methods. For instance, some may like a cost breakdown of their stay by day, while others are happy with a rate for their entire stay. This is where either Daily Pricing or Length of Stay pricing strategies might come into play. Sometimes you can spend far too long trying to understand the strategies of your competitors, asking: Competitors are certainly not the only factor that should influence your hotel’s room pricing. Often it’s better to look at competitors after you think you’ve priced your rooms to advantage and then adjust as needed. With the increased availability of real-time marketing data, it’s entirely possible to design a multi-tiered dynamic pricing strategy that can change at a moment’s notice. With accurate prior knowledge you can easily: Technology can also play a major role in accurately and effectively establishing pricing strategies at your hotel. Pricing and business intelligence tools make it much easier for you to monitor the market, track
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