Use These 5 Tips to Define Your Hotel’s Pricing Strategy
They are continually analyzing data and adjusting rates to find the right balance and be able to boost demand without jeopardizing their hotel’s bottom line. What makes pricing so complicated is that each room type is unique, so revenue managers must thoroughly evaluate their strategy and make the proper adjustments to obtain the best margins for their business.
The hardest part is identifying which guests are most profitable and determining the best rates to sell to each segment. Ideal pricing is achieved when its based on generating guest value. Based on this value, hoteliers determine special rates, offers, prices and discounts for their guest mix. At the same time, direct competitors are analyzed using variables from our BQI , proposing the best pricing strategy for your hotel.
At BEONx, we understand how complex and how important it is to determine the right hotel pricing strategy. That’s why we’ve prepared a series of preliminary questions to guide you during this process:
What do my guests need?
Since your guests are fundamental to keeping your business running, it’s important to adapt your pricing strategy to each market and guest type. Most hotels use dynamic pricing, but so do many OTAs and metasearch engines. That’s why it’s fundamental to analyze your market and guest mix to understand your guests before pricing rooms.
What pricing strategy best complements my business mix?
To optimize revenue, it’s important to select the right strategy for your hotel’s business portfolio. What factors should you consider? The two main considerations are your hotel’s business model and your guests’ average length of stay. Hotels focused on airport guests will have a lower average stay than destination hotels. Thus, services associated with different guests will have varying pricing strategies.
How does my direct booking pricing policy affect the rest of my hotel’s distribution channels in terms of contracted technology?
Hoteliers should evaluate any potential impacts on direct channels and on the following tools:
Property management systems (PMS).
Web booking engines.
Customer relationship management systems (CRM)
Revenue management systems (RMS).
Some questions you may come across are: Which pricing strategies are best for specific production volume? What is required to integrate a new tool? What is the cost and potential ROI? Prior to contracting new tools that can greatly condition booking costs, it’s important to ask questions.
Which pricing approaches and strategies are best for my direct channels?
One goal of your pricing strategy is to analyze the guest acquisition cost and attract as many prospects as possible to your website. Without entering into problems caused by parity pricing, the more direct bookings you drive at a lower cost per acquisition and the more value you provide to your guests, the better.
Price is the most important influencing factor when guests book a hotel room. That’s why it’s important to provide incentives for guests to book directly with you. Guests are generally willing to pay more if they feel like they are getting more value. Perceived value is more important than actual value. For example, you create a win-win scenario when a guest feels like the “extra” you are offering is worth more than what it actually costs you.