It is with no doubt that right now every hotelier whether investor or industry captain is still in a state of shock after eighteen months of close to no business for some and limited business for others,
Now that the industry is attempting to get back on its feet globally with the vaccine rollout in big numbers across the world, I found the right time to remind hoteliers of the basics of competitive room pricing strategies that will rather speed up their recovery period.
The room rent you charge for your hotel rooms plays a very important role in your business, especially when you are trying to sell more rooms. Pricing your rooms at the right price at the right time will help you sell more rooms and boost your occupancy, which ultimately leads to increased profitability.
Below I will share a few important strategies that hoteliers can adapt in order to maximize the revenues and speed up their recovery post-pandemic;
Know your market segment; It’s essential to set your hotel pricing strategy that is in line with your market segment. Always keep in mind which consumer groups you are targeting and their different booking behaviours. Some of these segments may include ad-hoc group series, transient leisure, weddings, corporate bookers, business groups, conference and events inhouse, conference and events out of house, and contract room (for instance, airline contracts).
Check your performance on the previous day; Start your day by reviewing your hotel performance on the previous day. Make sure to check your occupancy, revenue, average room rate and no-shows. You can also compare the figures of the day before with your performance from the previous year. To help you with this work, you can use the daily statistical reports from your operating system.
Benchmark your rates against competitors; Know your competitors set and analyse your pricing against theirs. By comparing your prices with other hotels, you get a sense of what type of rooms are selling and at which rates. Determine your competitive set based on similar offering, amenities, price, location, size, star-rating, and target customer. A competitor analysis will also give you an idea of how your city is performing in a specific period.
Collaborate with other teams; As much as you can, set a time to meet with the sales and marketing team to discuss opportunities at your hotel so you can help each other and work towards the same goal. Understand the marketing campaigns running at the moment, including offline and online strategies, and optimise the campaigns based on occupancy level.
Set your rates for the next 3-6 months; Review your pricing at least once a day and get an idea of which dates might be an issue. Based on that, decide if you need to update, increase or decrease your following rates. Your hotel should have inventory loaded for at least 6 months out, and everyday you should review pick-up and update rates accordingly.
Ensure rate parity across all distribution channels; Always double-check if your PMS sent the updated rates to all your distribution channels to maintain consistency in every channel. Bear in mind your users’ behaviour when they are looking to book a hotel with you. Check if all rates are updated and visible to them, and make sure there is rate parity across all your channels, specially on your booking engine. With Google Hotel Ads for instance, you can quickly and easily check your rate parity.
Make your direct channel the best option for your customers; Always remember that selling your rooms through your brand website is cheaper than selling through online travel agencies. Make sure to make your direct channel more attractive for users to encourage them to book direct. You can do that by offering a little extra to your guest which they can see as value for money. For example, you can offer free drinks, discounts on their booking, cash back, loyalty points, and so on.
Occupancy-based dynamics; Occupancy-based dynamic pricing strategy in hotels is a great way to increase room revenue. Make sure that you are pricing your hotel rooms based on supply and demand. You must increase your room rates when demand exceeds supply. For example – if 20 out of 25 rooms are occupied, you can charge more for the remaining 5 rooms. This approach will increase your ADR and RevPAR.
Additionally, at low-demand seasons, when your occupancy is low, you can charge less for your room to attract bookings.