Countless times I have been asked: What is the secret to pricing a hotel room?
Want to know the industry’s undisclosed truth? Tune in, folks!
Revenue management teams at properties spend an incredible amount of time per day deciding and readjusting the prices sold for each day. These experts factor in demand, price sensitivity, pick-up, and many more variables. They also consider different rate plan offerings – should there be a non-refundable offer, flexible, flexible with breakfast, advance purchase for 30 day or 60 days out, or 2-night minimum stay.
So what is this mysterious pricing secret if these savvy experts have already cracked it all? It so happens that all of these decision-making hours are spent on setting the entry level room type price. If the industry experts were asked how other room types are priced, most often answer sounds like: “well, we add a supplement”. Further probing questions such as “How is this difference decided and how often is it changed” would result in: “Hmmm, well, I look at what my competitors charge for the higher rooms, and maybe I adjust it once or twice a year”.
Wait…let’s pause here for a second.
All of that effort into pricing, potentially, results in having only the lead in room type priced correctly for a date, while the premium and possibly more profitable categories have to fend for themselves! It is no wonder then that hotels end up upgrading more than 50% of the time, as the higher categories are aspirationally priced and do not sell for the price they are featured for.
By now, I hope are you agreed in saying that this is a ludicrous waste of money and time, and are ready to take pricing to the next level.
First step: you need to be open to listening to what your customer is willing to pay for those higher categories and accept that is not your static, predetermined supplement.
Secondly: allow Pace to do it for you! Here at Pace, we let the old habits die quickly, and from the moment you start with us, you can optimise each room type on its own. That’s right – we are not talking dynamic supplements; we are going full-scale with each category being its own mini-hotel and priced independently. This allows you to identify exactly what the customer is willing to pay for each room. How cool is that! Needless to say, the bigger impacts from this are: better conversion per room type, making more money, and improving your customer perception of your property.
So what are you waiting for? Now is the time to shake off the old static supplements and jump on the revenue revolution bandwagon.
Say hi to the future of pricing.