Pricing is one strategy that you cannot afford to get wrong, get that right and you can hit your sales targets and reduce operational costs.
The opposite is also true; if you have no strategy in place, it’s more likely that you will fall short of your sales potential and leave your guests confused by your pricing and booking elsewhere.
Be smart and agile when it comes to managing your pricing. Put some fundamental principles in place and always remember that you want to ATTRACT guests, not put them off with rates 3/4/5 times higher than they ever have been. Value is still significant; inviting your newly acquired guests back in the autumn and winter months is easier when value is at the heart of your proposition.
Every hotel will have considerations that are fixed and may affect your pricing strategy. Go beyond setting static rates that never move.
Spending hours trying to understand every complexity of revenue management is also futile right now. Keep things simple and your plan agile.
It should always be about revenue generation. Driving sales, maximising profitability and ensuring the experience is exemplary for your guests. Clear pricing that’s easy to understand and book is the key. Scrolling endlessly through rates and packages is not the way to achieve this. Your guest’s online experience comes first.
With this in mind, you should always consider the basics:
- Number of bedrooms
- Onsite facilities – restaurants/spa/golf/cinema/conferencing/theatre
Equally, if your hotel has been the first choice for corporate guests before the pandemic and you want to shift your position, that takes more effort.
- What do your guests want?
- Will real-time pricing increase your occupancy?
- How can you increase your online bookings and visibility?
- What other spaces can you sell? (this deserves a blog of its own. Coming soon)
Checking historical data and trends are a revenue manager’s comfort blanket. Whilst that data may seem lost. It’s not.
- Check your business mix. What new audience types booked with you? What price did they pay, and what was the lead time for booking?
Pricing strategy starts by understanding what market segments make up your business mix and the differing price points.
Prioritising which business segments will be the first to return is a smart move.
Creating experiences that attract new and returning segments gives you control over your rates and inventory. It will also allow you to create stories and content around attracting these guests. Guest conversion is higher when you adopt a clear strategy.
Over half term weeks, create a 4-night experience with a fixed arrival day: Sunday; this should be a high demand experience and therefore priced accordingly.
Your second experience with a fixed arrival day would be the following Thursday. Price this experience lower than the first.
You will extend your demand for half term to 8 nights.
This tip is great for hotels looking to increase their market share of family business.
Real-time data will help you make the most of your pricing strategy. Tech tools will make it easier to see the complete picture. Whether that’s comp set pricing, business analytics, GDS insights, benchmarking or making sense of your system reporting, ask an expert about the best way to utilise tech for your hotel.
Comp set checking is another tactic that would typically give comfort to the hotel team when managing pricing, and this is still worthwhile. However, change your approach. Check your competitor pricing based on the market segments. Is your family experience not picking up?
Look at your competitor set within this segment. You may not have considered that within a 2 hour drive time, is a family focussed hotel already established and is offering more value or a lower price point.
Think about market trends. STR has free reporting tools that you can contribute to and benefit from. Ask us if you would like to know more.
- Check pricing by segment
- Check the price versus the value for each segment
- What new competitors are emerging that will compete with your offers?
- Check the cancellation policies of your competitors; these policies are even more critical right now; prepay/advance purchase rates are still valid, bit include fully flexible cancellation to remove booking barriers
RATES AND OFFERS
Static pricing is no longer fit for purpose in a hotel with fluctuating demand. A Revenue Management System that will make the most of unpredictable shifts in the market can be valuable. If you are a hotel operating with midweek and weekend rates by season, let’s start with some core pricing principles.
Forecasting comes first. Understand what business you have on the books, what business you have budgeted for and identify the gap. Once comfortable with this, expand upon it and forecast by segment and which distribution channels you expect to yield business. Each segment has a different price point.
Predicting demand is your first task. This way, you know what you need to achieve well in advance. Your marketing efforts can attract early bookers through the most profitable channel. As your occupancy grows, so does your rate. When demand is low or a marketing campaign is not performing well; you can easily see what is happening and when.
This dynamic pricing model’s simplicity means that you can predict what occupancy and revenue you expect to achieve each day, as far as 365 days out.
Your core pricing structure is robust and scales up and down based on occupancy. You can then consider your packages, add ons and experiences based upon this core rate structure.
Value-based pricing is a principle that you can adopt when your brand position dictates you should be leading in the marketplace. Yet with added extras, the value perception is higher. Define a pricing toolkit that allows you to add value if and when needed. Whether that’s a room only rate with complimentary breakfast inclusion. A late checkout, early check-in, or inclusive use of other amenities (such as spa/golf/cinema).
Closed user group pricing is a savvy way to offer discounted pricing to your guests. Always discounting from your core rate structure, set prices, stay controls, add ons, terms and conditions. It will help you fill low demand dates with ease. It’s beneficial to have a great CRM system that will identify the guests who book when you need them to, at the price you would like to achieve.
Let’s not forget that by creating an “experience”, you can have an agile price with many value-adds specific to the segment you want to attract. Is there a gap in your forecast that you can occupy with families?
Stay Controls are an excellent way to work your inventory to achieve 100% occupancy. With high leisure demand expected, steer clear of blanket controls of 2 or 3 nights; instead, work your room types with stay controls. Apply minimum lengths of stay to room types and audiences that you know will stay and when finally use fixed arrival dates and work your holiday periods to extend as we advised above.