Whether it’s a hotel or another business, ensuring that “the price is right” might be difficult. Unfortunately, lousy pricing tactics are responsible for 30% of business failures. That is only one of the reasons why developing effective hotel pricing strategies are critical.

Therefore, a hotel pricing plan is essential to hotel revenue management. It is the price you charge for each hotel room to book as many rooms as possible and maximize revenue. It’s the sweet spot between pricing enough to generate a profit and trusting enough to avoid losing clients to the competition.

One such pricing strategy in the hotel industry is seasonal pricing, aiming to maximize revenue during peak and off-seasons. In this strategy, room prices are altered according to the season or time of year. Businesses that use an excellent seasonal pricing strategy can maximize revenues by capitalizing on customers’ desire to pay more during peak times and bringing in additional customers when demand weakens.

Keep reading as we discuss seasonal pricing strategies for hotels and how you can create one to generate maximum profits.

What is Seasonal Hotel Pricing?

Seasonal pricing refers to rates set during specified times of the year, such as peak season, off-season, and shoulder season, and are slightly different from the regular introductory price. Regal pricing involves altering rates based on market demand to maintain consistent business throughout the year.

However, seasonal demand might vary significantly between hotels. If a site is popular because of festivals and events, the ‘seasonal’ market may be most robust when these events are concentrated.

In contrast, certain hotels, such as beach resorts, have clearly defined seasons corresponding to the year’s four seasons. Summer is peak season (with higher seasonal prices), early spring and late winter are shoulder seasons, and every other month is low season.

Need for a Seasonal Hotel Pricing

Assume you own and operate a hotel near a famous beach. During the warmer seasons, beaches worldwide become popular tourist destinations for those eager to soak up rays and sand. This is the busiest time of year (peak season). This is the time of year to make money – if you maintain the regular introductory pricing throughout peak season, you will miss out on profits. On the other hand, increasing your lodging prices will raise your earnings.

During the winter, the beach would appear deserted; this is your off-season time. Attracting visitors to your hotel is becoming increasingly challenging. When business is slow, there’s no reason to demand exorbitant pricing. You may enhance occupancy and earn a few more dollars by lowering your hotel rates.

For these reasons, you want a seasonal pricing plan to keep your hotel running throughout the year.

Benefits of Seasonal Hotel Pricing

Seasonal rates are unique hotel pricing tactics that hoteliers can use to increase income. These are most beneficial and effective at times of intense demand. Seasonal rates can also help you price your hotels effectively to accomplish your commercial and financial objectives.

The following are the primary advantages of seasonal pricing:

  • Charging extra during peak seasons can help you make more money.
  • It provides a competitive advantage in meeting client expectations.
  • You can increase each room’s profitability by raising your hotel’s occupancy level.
  • You can keep your hotel completely booked even during down seasons with discounts.
  • It can aid in maintaining customer loyalty and a positive brand image.

Drawbacks of Seasonal Hotel Pricing

While seasonal rates have certain advantages, they are not always the most successful pricing approach in today’s dynamic hospitality industry for a variety of reasons, including:

  • Capped Revenue: Relying entirely on seasonal rates severely limits a hotel’s revenue potential.
  • Variability: Hotel room demand can change dramatically within a season.
  • Travel Trends: Travel patterns are changing; many modern travelers want greater flexibility and are willing to visit sites during non-traditional seasons.
  • Competitive Pressures: Relying entirely on seasonal rates may result in losing market share to rivals in highly competitive marketplaces.

How do you develop your hotel’s seasonal pricing strategy?

  1. Define Your Seasons

    Despite the name, “seasonal” does not usually correspond to the actual seasons of the year. Seasonal might refer to a specific holiday or yearly event at your hotel.

    Examine your historical statistics for any periods of the year when your rooms are booked more frequently and explore why. If there is a noticeable trend, you should be able to quickly identify your seasons and create a plan around these periods.

    Also, using this data, you should be able to divide the year into three distinct seasons:

    • Peak Season: The period when demand for rooms is at its peak.
    • Off-season: When the need for spaces is at its lowest.
    • Shoulder Seasons: The time between peak season and when guests may still be interested.
  2. Identify Additional Seasons

    As previously stated, your busiest times may not coincide with actual seasons. This means you’ll also need to discover any public holidays or special events that will raise demand in your area. For example, if you reside near a famous music festival, consider upping your fees during that time.

    Similarly, if you live in a city with a major athletic event once a year, consider hiking your costs during that period. You can also consider global holidays such as Christmas, Valentine’s Day, and New Year’s Day.

  3. Analyze Key Performance Metrics (KPIs)

    To track performance, all successful firms collect and analyze data. Your property must decide which critical indicators to focus on to make more educated decisions, particularly regarding seasonal pricing.

    The following are three success measures that you must use:

    • Average Daily Rate (ADR): The ADR indicates your income from occupied rooms. It informs you of the average amount a guest spends for a room at your establishment.
    • Occupancy rate: While you might only sometimes prefer your hotel to be fully booked, the greater your occupancy rate, the better. If a room sits unused for the night, you rapidly lose revenue and miss out on an opportunity to build your business. Similarly, if your occupancy rate should be rising as it should, even while you’re taking advantage of high-demand seasons and events, examine your booking channels.
    • Revenue per available room (RevPAR): The most common technique to determine RevPAR is multiplying your ADR by occupancy. You calculate your RevPAR for a specified period (day, month, or year) and compare it to other periods (RevPAR over weekends or holidays).
  4. Determine Your Base Price

    The base price is the rate you charge for the hotel room during any period (other than the season). In other words, you will set the lowest price for your space.

    Some factors you need to consider before determining your base price are:

    • How much do you spend on keeping the room clean?
    • What services will the consumer receive when staying at the hotel? For example, a gym, parking, a game room, etc.
    • What kind of room do you have? How do you determine the cost of each room type?
    • How much do your rivals charge? Do they have something else to offer that you don’t?
    • Understand your customer’s budget and how much they can afford to pay for the lodging reservation.
    • How much profit do you want to make?
  5. Fix Your Seasonal Prices

    Once you’ve determined your base rate and peak seasons, you can build seasonal pricing markups, packages, and promotions to maximize earnings in each season.

    Setting your seasonal pricing for at least a year is best to avoid guests purchasing rooms at the base rate during your peak season. This should be done across all third-party channels and on your company’s website and booking system.

  6. Test Different Prices

    Setting seasonal prices is complex, and seasonal pricing varies for each hotelier. You should experiment with various price points to find the best costs for you. You must pay attention to market pricing rates for this.

    Experiment with different rates using these insights to find which works best for you. Furthermore, you can test on other channels or platforms to see which performs best. This way, you’ll know precisely how to alter your charges based on the season.

  7. Create a Cancellation Policy

    Any hotel must have a cancellation policy – this contains the laws and restrictions to be followed when canceling any bookings.

    Let’s look at it this way. Assume someone books five rooms for four nights and three days during the holiday season and cancels at the last minute. In such cases, you generally need to refund the guest, resulting in a loss for the hotel. To address this issue, you must establish a cancellation policy.

    The cancellation policy specifies how many days before the coming date the customer can cancel the booking and how much he will be charged for the cancellation. As a result, the number of cancellations will be reduced, and the hotel will be protected from loss.

  8. Review Your Profits

    Once you’ve established your seasonal hotel pricing strategy, tracking and assessing its effectiveness is critical. This can be accomplished by monitoring critical indicators like guest reviews, occupancy rate, revenue per room, etc. This will assist you in determining how well your pricing plan is functioning and whether any revisions are required. By monitoring such indicators, you can ensure that your hotel’s prices are always reasonable and competitive.

  9. Invest in Automated Software

    Seasonal pricing can be synced with your existing platforms using automated software solutions. It can also help you raise your REVPAR by tailoring the charges to the season.

    These solutions will also eliminate human entry errors and save significant administrative time. You can also monitor how the seasonal rates are performing, informing you which prices have worked and which ones need to be adjusted.

    Similarly, revenue management technology solutions can assist you in developing effective pricing strategies in the hotel industry. They analyze data and optimize prices in real-time using machine learning and artificial intelligence.

8 Seasonal Hotel Pricing Strategies to Maximize Profits

In the hotel sector, seasonal pricing techniques incorporate real-time data and algorithms to alter room rates based on various criteria. These tactics aim to maximize revenue and occupancy and effectively respond to market demand.

The following are some popular seasonal pricing techniques that you can use in your hotel:

  1. Length of Stay Pricing

    Offering discounts on extended stays or bundling many nights together at a discounted cost encourages guests to stay longer, leading to higher overall income.

  2. Last-Minute Pricing

    Hotels might use last-minute pricing techniques to fill empty rooms that have yet to be reserved close to check-in. Offering enticing last-minute booking discounts can help maximize occupancy and income.

  3. Demand-Based Pricing

    Hotel pricing can be modified by demand trends. When demand is high, prices rise to capitalize on the willingness of customers to pay. In contrast, rates can be reduced during periods of poor demand to encourage more bookings.

  4. Competitor-Based Pricing

    Real-time monitoring of competitor prices enables hotels to respond quickly to market price changes. If a competitor lowers its rates, a hotel may decide to equal or slightly reduce them.

  5. Personalized Pricing

    Hotels can provide customized pricing by analyzing guest data and preferences. Loyal clients or guests, for example, who often use specific amenities, may receive special pricing suited to their interests.

  6. Package Pricing

    Rather than focusing exclusively on hotel room pricing strategies, you can offer package deals that include rooms, food, amenities, and experiences. This technique improves the entire guest experience.

  7. Group Booking Pricing

    By providing dynamic pricing for group bookings, event planners are more likely to choose their hotel for family trips, school excursions, and other group events.

  8. Promotional Pricing

    To motivate potential visitors to book reservations fast, dynamic pricing methods can include limited-time specials, flash sales, or exclusive offerings.

Seasonal Pricing Examples

Some examples of seasonal pricing strategies in the hotel industry are:

  1. Marriott, one of the world’s major hotel companies, uses seasonal pricing to alter room rates based on occupancy, booking patterns, and special events. Their implementation guarantees that accommodation rates are optimized to maximize income while providing competitive rates to customers. Marriott also employs dynamic pricing to automate and optimize their pricing methods, which has helped them increase revenue by 5% each year on average.
  2. AccorHotels uses seasonal pricing to offer tiered rates to different guest segments. They forecast demand using predictive analytics and alter rates accordingly, improving occupancy during low-demand periods.
  3. Hilton uses seasonal pricing to customize rates based on individual visitor preferences and behaviors. Hilton can provide personalized rates that reflect customers’ willingness to pay by analyzing data from previous bookings and guest interactions.

Wrapping Up

Hotels can employ seasonal pricing to stimulate demand during the off-season. During off-peak months, offering discounted prices, bundles, or value-added services can attract customers and increase bookings. Also, hotels can minimize revenue loss and retain profitability by carefully regulating off-peak pricing.

Moreover, by employing innovative technological solutions and strategic pricing structures, hotels can provide more personalized and value-driven customer experiences.

Trusted Path to Create a Perfect Pricing Strategy