With 2015 well underway, it’s time to start executing your hotel’s pricing strategy. As more and more hotels realize the value and contribution of pricing to their revenue maximisation, the future of hotel pricing seems to be more competitive and dynamic than ever. So what is your pricing strategy for 2015?
Here are the top 3 actionable tips to help you in pricing your hotel rooms right in 2015.
Tip #1 Ensure deep assessment and analysis of competitors’ pricing
Many hoteliers on being asked “How did you determine your current pricing strategy?” responded with answers such as “My competition slashed their rates by 10%, so did we.” Such responses clearly indicate that many hotels are still aping their competitor’s pricing strategies regardless of how good or bad it may be. It’s not uncommon in the hotel industry to see that when one hotel cuts prices, it often triggers a downward price spiral and others simply lower their prices fearing the risk of losing occupancy. And while nobody really wants to do it, they do so in the fear that not lowering prices may cause them revenue loss.
Thus ensues a price war where your revenues take a beating and there is no real upside to compensate for it.
One simple way to avoid this price war is by taking a deeper, more insightful view of your competitors’ pricing. Consider competitor’s data through multiple lenses and analyse the same to build up your response. A next-generation rate intelligence tool provides you with such in-depth analysis of your competitor rates. You get to see rate trends, booking pace, overall inventory levels and much more to help you define your pricing.
Tip #2 Leverage historical pricing intelligence
“Study the past if you would define the future.” ― Confucius
Historical business intelligence (entailing price sensitivity impacts, total occupancy and capacity) collected over a minimum of year’s time, can be extremely useful in calibrating your own price elasticity and rate optimization strategy. Since different markets have different price sensitivities, historical price intelligence is critical to determine the right way of adjusting the rates and making comparisons for estimating the enhanced revenue performance.
However, it’s important to remember that you need to leverage these historical patterns and plug this intelligence with the current business factors such as new competition hotels in your locality, your reviews and ratings, etc., so that you don’t miss your goals of maximizing everyday profits.
Tip #3 Smart discounting
Let’s take the example of one of the recent hugely successful digital campaigns – Booking.com Genius Discount Program. Top bookers on Booking.com get private genius rates (10% off all the rates for a Standard Room type). This optional participation programme mutually agreed between hotels and Booking.com generates rate codes that cannot be loaded on your hotel’s website, but can be mapped to Trust Rate Code NBG (=Booking Genius rate code). This ensures that reservations will be received. So, hotels can invest in such innovative digital campaigns to drive more online bookings.
It all comes down to understanding that pricing recommendations are critical to your hotel’s success. Though each hotel’s pricing approach is somewhat unique with varying internal and external pressures playing their roles; the universal overarching factors such as booking patterns, available inventory, competitive response, etc., can help you greatly in pricing your hotel right and maximizing your revenue in 2015.
Do let us know (in the comments section below) what’s been your experience with pricing your hotel right in 2015.