Pricing has always been an important aspect of any business as it plays a quintessential role in the effective running of all industries worldwide. Hotel price management, i.e., how the goods and services of any business are priced and tagged in the extremely competitive market scenario goes a long way in determining the firm’s profitability in the long run.
The hotel industry is a perfect example of the application of dynamic pricing in diverse market situations to ensure that each room is booked at the right price to the right guest, ultimately yielding profits and numbers for the hotel.
Well, multiple factors like the rise of online booking trend, the emergence of multiple channels for booking, cut-throat competition in the hospitality industry and rapidly fluctuating demand patterns has made it almost impossible for the hotel players to closely monitor the industry, competition rates, and trends manually on a day-to-day basis and accordingly make changes to their own pricing structure. Doing that would mean revenue managers totally immersed in the function of pricing, leaving no room for performing other roles.
Moreover, since the rates for the hotel rooms are quite prone to rapid changes as they are based on the ever-changing demand and availability of rooms at any particular time and location, developing the most effective pricing for your hotel could sometimes be challenging. With an upswing of all these complexities and the many limitations that manual operations may pose, automation comes to the fore as a strong rescue to the industry at a time when it is needed the most.
Data plays a vital role in such a scenario, empowering the hotels to make sound pricing decisions and develop a unique revenue strategy for their property.
Undoubtedly, hotel price intelligence equips the hoteliers with all the necessary market information and supports them with robust and meaningful insights that smarten their functioning by helping them act real-time and intelligently.
What is Price Intelligence?
Price Intelligence is based on a unique automated mechanism based on intense market data crunching that identifies, analyses and outlines the pricing and revenue related data of the hotel, its competition and the industry at large, demand forecasting based on past trends. Thereby enabling hoteliers to gain a deeper and better understanding of the pricing strategy of competitors, existing trends and changes in the market forces, along with its impact on their own prices.
Having the wealth of readymade information on competitor prices and industry demand and supply patterns almost instantly facilitates faster and informed decision making for hoteliers.
Real-time data, a key component of hotel price intelligence, not only includes key insights on competition rates, but also on the inventory available and various promotional activities being run by other hotels and OTAs. Information about the competitor promotional activities (any discounts, schemes, room offers, special packages, etc.) is utmost important, as it gives hoteliers a three sixty degrees view of the market, thereby highlighting opportunities and misses if any.
The lack of such valuable inputs and insights could prove to be hazardous to the revenue numbers; hotels might end up charging more (and have less occupancy) or less from their guests (leaving revenue on the table). The former impedes customer loyalty while the latter would erode the hotel’s profits. In both cases, their growth prospects run a serious risk, a not so desirable situation.
A sharp rise in the use of advanced hotel pricing intelligence tools that facilitate optimized hotel room pricing has emerged as a key trend in the recent past for reasons that need no further mention.
However, it is important to understand the nature and requirements of your hotel and choose the best technology to reap the best results in the form of benefits. The use of a suitable hotel price intelligence solution would put you on an edge higher by allowing you to price your rooms for optimum occupancy and revenue.
Why Employ an Advanced Hotel Price Intelligence Solution?
Due to its multiple benefits, already discussed and some of which are listed below, it is advisable to choose the right hotel price intelligence technology that is best suited to your hotel business goals and targets.
a) Competition Price Tracking – Without the availability of competitive rate information, success could be a far-sighted affair. The implementation of an efficient hotel Rate Intelligence Solution takes care of this most important aspect, as it brings forth a detailed price report of the key competition/chosen comp-set, which facilitates comparison and therefore helps in effective and optimized pricing.
b) Quick decision-making – By offering actionable insights on a real-time basis, the use of hotel RateShopping tool would put you on top of all price developments taking place in the industry and alert you if any instant action is required. By being able to assess the live demand in the market, you could react faster and in a more accurate way – whether it is increasing your rates, lowering them or running any promotional offers, etc.
c) Maintain rate parity – As rate parity is a key factor in the pricing strategy of almost all hotels, the availability of real-time data aids in effective distribution by making sure that the rates that you set for your room types across multiple channels are in line with the industry trends and do not highlight a stark difference.
d) Make long-term forecasts – Almost all the pricing intelligence tools offer the supreme advantage of long-term forecasting, providing hoteliers an opportunity to optimize their room rates well in advance. The graphical representation of these forecasts is usually easy-to-understand and aids in proper planning.
e) Focus on other vital organizational roles – As technology takes over the role of competition and industry rate tracking, revenue managers could spread their wings in multiple directions and take charge of other important functions where their knowledge and expertise would yield fruitful results.
f) Revenue Maximization – By being able to sell your room at the best price in any kind of market situation, you are ensuring that you are not missing revenues due to any unforeseen price variations taking place in the market. Over the period, the use of active hotel price intelligence facilitates the fulfillment of revenue maximization goal.
While a majority of the big hotel players are already availing the many benefits of using sophisticated price intelligence technology, most of the small players are still comfortable with the conventional way of digging out extensive reports prepared internally using excel sheets or perhaps, by conducting their own research on a small scale manually. However, with technology advancing at an unimaginable speed and putting all the existing processes to rest, one thing is clear – the use of hotel price intelligence tools is not a short-term trend, but a long-term necessity, without the use of which the hotel could suffer various technology and revenue setbacks.
The key is to stay alert on the industry pricing trends and the Price Intelligence Technology is just about that!