To a hotel guest, it may be surprising to see that the same room categories may charge different rates on different dates and days. Or why even similar category hotels may have variation in their room rates.
Well, it’s not something that hotel’s do randomly but a well thought out strategy. There are several factors that come into play, affecting the pricing of a room and hotels need to consider them all before arriving at a fair price structure.
Common factors that influence the price structure include: special events or holidays, conferences, external factors like weather and so on. It all depends on the demand and supply of rooms which in turn is based on external factors. This is very similar to how airlines set their seat prices. They may be cheaper if you book in advance but airfares shoot up as you move closer to the departure date.
Most big branded hotels have revenue managers, but smaller hotels mayn’t have the resources to dedicate an additional staff member to manage their revenue. In such scenarios, PMS systems can go a long way in supporting that job. They can track the forecasted room demand to create a fair price structure,
Two major factors that hoteliers must consider to achieve fair pricing,
The right business mix –
Analyze different marketing segments to arrive at an optimum business mix. Say, OTA’s contribute the most to your hotel profitability, followed by Corporate bookings and then walk-ins. Your pricing strategy should be aligned with this business mix. Promoting walk-ins over OTA’s can be detrimental to your pricing strategy and in turn your profitability.
The right rate plan – Understand the different kind of rates out there and decide which is bound to bring in maximum profits. You can dabble with Qualified rates (early bird discounts since he has opened a certain discount by booking specific days in advance), BAR (No conditions involved), Fixed Rates, Dynamic Rates (adjust pricing based on cost, demand and competition) and Group Rates (Corporate or social event). Sometimes hotels which are similar in location and category are priced differently, even though the external factors affecting the hotel’s demand and supply are uniform. This may depend on the value addition – like personalized attention to every guest.
Armed with the above data, you can arrive at a fair price structure that lets you,
-Price with more clarity
-Maximize business from each segment
-Plan for the future
Hotels shouldn’t shy away from raising their room rates if they can ensure that their guests can avail an impeccable stay at their property. Guests mayn’t always look for cheaper rates, but always a great stay experience for sure.
This article is sourced from TodaysHotelier.com."Is your independent hotel following the right pricing strategy?",