Finding the right hotel pricing strategies can effectively boost your revenue. Not just that, but competitive room pricing can also help increase the occupancy rate of your hotel.
The price should not necessarily be low, but the worth should reflect the value of your service.
Every hotelier, whether new or established, might need to set or upgrade their current pricing strategies. It is because the trend and demand mindset of guests or travelers keeps changing over time.
By imposing the right strategies, you will be fair in what you ask for your services to the guests/customers. Adequate planning and execution will let you set a value that isn’t too high or too low compared to the competitors.
Get a closer look at the detailed explanation of these strategies and know why this is an important inclusion for your perfect business execution.
The Importance of Hotel Pricing Strategies
Before the article can start elaborating on the impactful hotel pricing strategies, it is important you should know the importance of acquiring them.
The pricing principle for every hotelier should always be to calculate profit, only after the operational costs are sorted.
If you price the rooms too low, you will have no profit at all after spending on the operational costs. So, the perfect ideologies are essential for the purpose, and this can be the key to your overall business success.
Pricing is a crucial factor in a customer’s decision. It is the translation of value that you are selling in return for cash. Having the best strategies will eventually help you reach out to the target market.
Too-low or too-high a price for your hotel business can drive you out of the business. Low pricing will lead you to miss out on the overhead costs, while high pricing will drive the potential customers away.
Moreover, deciding on the fair price for your rooms will help you attend customers of all types. Not every customer that approaches you will prefer the most expensive room you have. Some of them will look for cheaper options!
Therefore, it becomes essential for you to impose room pricing strategy to attend customers of all types. Hence, it becomes one of the most evident adaptations for a hotel business.
5 Impactful Hotel Pricing Strategies
It is time hoteliers get their clear insight into the powerful pricing strategies for the growth aspects of their hotel business. So, the strategies include:
1. Price-Per-Segment Strategy
It is one amongst the most common hotel pricing strategies across the globe. And this idea guides you to offer the same service or product at varying prices to customers of different types.
You can alter the room rates for corporate segments or customers based on the fact that they book multiple rooms or meals with you. For an even better response, you can also consider lowering the rates while you are selling multiple rooms to a partner travel agent. It will lead them to add rooms to their specific travel packages.
2. Forecast-Based Pricing Strategy
Forecasting has been a traditional way of deciding the rates. It needs a proper vision of anticipated demand cycles.
Hence, it means that the room rates of a hotel will be decided based on the demand for it at that point in time.
During the vacation months of the year, when tourist visits are high, the room rates can be kept higher. But, there should be a drop in rates during the off-seasons to attract travelers in those months.
If you are keen to use the forecasting strategy, then you should primarily have accurate records of your hotel operations. It means that you should gather data on room rates, occupancy, past revenue, and other related information.
Make use of these historical data in order to decide which month(s) has/have been your peak point. Based on that, you can forecast the pricing for your forthcoming months.
3. Rate Parity Strategy
Unlike the price-per-segment strategy, you need to maintain the rate consistency for the same rooms or products across all the distribution platforms.
The most appreciated element of this strategy is that your customers will have transparency on what services you offer and at what rates.
4. Offer Complete Package
The best way hotels can maximize their occupancy rate in peak months is by offering complete packages.
It means that you can offer them a bundle, where you will be giving them meal options, city tours, activities, and much more than just a room.
With this hotel rate strategy, you can eventually lower the price of your room, as you will have the opportunity to make a profit by selling other products or services.
Hence, customers who are traveling to a new city or country would find it feasible to take a complete package rather than arrange all of the package elements separately.
5. Length of Stay (LOS) Pricing Strategy
The Lenght of Stay (LOS) strategy works by adjusting the room rates based upon how long someone stays in an allotted room.
In some specific instances where the demand rate is higher than the availability, you can impose a ‘maximum stay period’ rule for the customers.
Hence, it means that when the demand is high, you need not adjust the pricing to make it cheaper.
Apart from that, when the demand is lower and the occupancy rate is limited, the hotels can encourage guests for a longer stay period. Hence, you can make the price adjustments at a lower rate to support your proposal to the customer.
How Can a Channel Manager Help with Rate Adjustments?
Channel manager lets you manage all room rates in one place. Every time you modify your room prices or plan on imposing some strategy, the channel manager will help you out.
You can change prices for all of the distribution channels at once or modify them as per the strategy, depending upon your preferences.
Irrespective of whether you want to impose a rate parity strategy or price-per-segment strategy, the channel manager will help you out with the same. Just follow the specified instructions, and your hotel pricing strategies will be imposed.
AxisRooms Offer you the Best Channel Manager to Thrive in the Industry!
AxisRooms is destined to help you out with your price adjustments across all of your distribution channels. It is upon you to decide the strategies, while the updates can be easily done over the channel manager.
You can sync the uniform rates for your specific rooms across all platforms with just one click. Monitor the occupancy rate over your informative dashboard, and analyze if the hotel pricing strategy worked out.
They have integrations with several travel websites such as Cleartrip, Booking.com, Agoda, travelguru, etc. This means that you can adjust and monitor your room rates over all of these platforms at once.
Take a closer look at AxisRooms and the features of their channel manager on their official website.