Pricing a hotel room, everyone has an opinion !
How do you price your rooms?
What factors do you take into consideration?
Do you know how many people rejected your hotel based on the price range?
How many times have you and your strategy team decided on the right rate, only to have someone the next day say to change it.
You would think that setting a price for a hotel is a quick easy process and it is. The problem that RM’s face every day is that everyone has a different idea of what a room price should be. From the guy who designed the hotel, to the banker who gave you the loan, to the housekeeper, and everyone in between, everyone has an opinion on pricing and of course they are all experts in pricing.
In addition, you have blogs, websites, news outlets, and etc. all telling your customers “Never pay the rate the hotel gives you, ask to talk to the GM or DOSM, they will give you a discount”. Then, you have hotel operators establishing SOP’s for reservations and front office that they can quote a customer the Best Available Rate, but if the customer asks for a discount you can give them from 15% to 40% off the BAR. This is called the fade and good hoteliers know that it “faded away” back in the 1980’s. The fade, however, is still happening and it’s not just independent hotels, I know several mid-sized and International chains that practice this because it’s what the GM wants. Those same GM’s will never say they do it because it’s just hush hush, keep it under the rug. They are hurting themselves and they are hurting everyone else.
This fade rate type of strategy hurts long term prospects for growth for everyone. Hotels need to police themselves and should stop implementing this corrosive strategy. By the way, your competitors know if you practice a fade rate policy, and they use it against you in the sales process. I always used it against my competitors when they had a fade rate policy.
Can you imagine how difficult pricing can a hotel room is in this atmosphere? There are allot of people in the industry who do this every day and not only are they hurting their own businesses, but they are hurting the entire industry. Wake up people and smell the coffee. Speaking of coffee, imagine if Starbucks® applied this same business model….
If you are willing to fade 15% off of your Best Available Rate, then it's not your Best Available Rate!
Training your staff to sell your service, and facilities, adds value to your property and to your staff.
How do you know if your team is selling your product or just discounting, call your staff, pretend to be a customer and see if your staff is practicing old bad habits?
I want to hear back from you, in today's market, do you practice “the fade”, and why?