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?

How to Choose the Best Revenue Management System for your Hotel

Whether you're the owner of a small hotel, or the revenue manager for a major chain, at some point in time, you'd be looking to maximise business revenue and impact. Therefore, it's imperative to focus on a comprehensive revenue management strategy.

A high quality Revenue Management System (RMS), can lead you to the path of success.

Thinking that just purchasing a RMS will boost your sales, you'll be up for a surprise. While it helps a lot in the long run, purchasing is only the beginning of the journey. As it goes with everything, the beginning can't be shoddy, and you need to understand the key benefits, USPs, and shortcomings of the software you're considering.

While buying such an important tool, you shouldn't be investing in the dark.

In order to make things easier, we've not considered Rate shopping and market intelligence tools (like: BeOnPrice, OTA Insight, etc.), which only show the prices of competitor hotels and leave everything else up to you. We’ve taken the time to detail some thoughts that could actually help you devise the right revenue management strategy for your property to boost sales.

Your choice will depend on several factors, out of which the most important one is the property size: 

• Big Hotel → 50+ Rooms

• Medium Hotel → 16 to 49 Rooms

• Small Hotel → 5 to 15 Rooms

• Micro Hotel → 1 to 4 Rooms

But regardless of the hotel size, a good RMS will put you ahead of the competition, and give you a substantial advantage in attracting more guests.

• So, what's the fuss about? 

• How do you make the choice? 

• How will the tool help? 

What’s a RMS ?

For most hotels, a RMS is a new addition to the set of tools. With changing times, these systems are becoming more flexible, open, and useful. They not only save a good amount of your time but lead to higher revenue. In fact, with a RMS, even the smallest hotels can leverage dynamic pricing!

These systems consider many important data points, including customer demand, market supply, and internal data. This information is used to calculate the right price for the rooms. It helps you optimise pricing across distribution channels from a single central dashboard.

In the simplest form, a RMS recommends the right prices, and allows you to update the inventory accordingly. It also sends updates to your Channel Manager or Property Management System. Most importantly, you're able to use the power of technology to automate time consuming processes, leading to higher efficiency in business operations.

A good RMS uses the data provided and a set of complex algorithms to conduct real-time analysis of the market and demand. 

With many RMS’s available for hotel owners and property managers, there's no such thing as the 'best choice'. There isn't a one-size-fits-all approach.

What are the benefits of using a Revenue Management System?

It goes without saying that a high quality RMS can help you calculate ideal room rates. You can use the software to adjust rates in real-time, consider projections of future profit and demand, and get crucial information about competitors. Overall, these details can help you adopt a strategic approach to maximise revenue.

Regardless of the size of your hotel, the main reason why a RMS is important is the ability to perform complex calculations quickly, efficiently, and accurately. It's the perfect tool to assess real-time market data, which is impossible to replicate manually. Most importantly, unlike the staff on duty, the tool works 24/7, 365 days a year.

While your Channel Manager makes it simple to distribute availability and prices to the different OTA’s your hotel sells inventory on, a RMS makes it even easier to adjust prices across channels simultaneously. Once everything is connected, there's no need to log in to each tool manually. 

As a result, you're able to improve key performance indicators most importantly revPAR.

The calculations made by the software determine ideal rates by day, audience, and room type, instantly adjusting prices across distribution channels from a single dashboard. This will also impact positively on your hotel's GOPPAR (Gross Operating Profit per Available Room).

Contrary to popular belief, RMS’s are even more important in smaller hotels, since fewer rooms require you to maximise revenue for each room. In larger hotels, it's an essential tool, since it's almost impossible to manually handle the workload of revenue management, which could eventually result in more errors and poorer decisions.

What are the Top RMS Features? 

RMS’s are full-fledged software packages, which come with a wide range of features and functions.

Integration into Your Tech Ecosystem

A RMS should integrate well with a wide range of applications, including Property Management System, Channel Manager, and Website Booking Engine.

While it's not necessary to connect the RMS with everything, you need to make sure all the prices get updated from a single place. Two systems should be able to communicate with each other and share data without disruptions.

Individual Channel Management

The RMS should allow you to optimise pricing across distribution channels through the Channel Manager. With a high quality RMS, you're able to leverage per channel pricing, discount prices, commissions, and generally optimise pricing opportunities to maximise revenue.

Open & Dynamic Pricing

A solid RMS lets you price distribution channels and room types independently of each other. While it's always better to set BAR pricing as a guide to manage room rates, the software should be able to calculate and suggest rates dynamically.

Additionally, it should be able to leverage complex algorithms, current market data, past performance data, and other crucial information to offer optimal room pricing.

Automated Rates Updates

With a lot of manual workload, revenue managers aren't able to work effectively and efficiently. With a good RMS at their disposal, managers and owners can automate routine tasks, such as uploading rates to Channel Managers. Ideally, your revenue management strategy should be running on autopilot. At the same time, it should be controlled with minimal scope for erroneous rates.

Monitoring Competitors

With proper monitoring of the competitors' rates, you're able to adjust your own pricing accordingly. A good RMS is able to find competitors' pricing on OTAs, track the price trends, and report the information in real-time. This helps you make price adjustments swiftly, allowing you to attract budget-conscious guests. 

A lot of RMS’s come with a built-in rate shopping feature, allowing you to check room rates of other similar hotels in the area.

Data Collection

If you're able to securely collect and store data, you're at an advantage to know exactly what's been working for your property.

In order to adjust pricing or make crucial decisions about inventory, you should be able to leverage accurate and extensive data.

It's always better to choose a RMS that collects, stores, and organizes data from across business operations, and provides everything in the form of easily understandable reports, charts, and graphs.

Intelligent Reporting, Monitoring & Alerting

A high quality RMS learns to automatically notify you about various things that could or should require your attention. This includes drops in important KPIs, special events influencing sales, or actions you could take to improve RevPar.

It's pointless to use a RMS without Intelligent Reporting. The platform should be able to build, export, and share important data, providing you with more time to focus on strategic decisions. These could include insights and KPIs, including RevPAR, occupancy rates, average daily rates, etc.

Forecasting & Revenue Estimations

Last but not least, apart from displaying historical data to help you set room pricing, a good RMS provides estimates for both the profit and the revenue you're likely to generate with the current strategies. This allows you to consider alternative strategies to maximise sales. 

Your RMS should allow you to identify the most lucrative up-sell opportunities, and even send out an email campaign to promote them.

Trust me, I would have wanted for things to be that simple, but they really aren't.

Feel free to contact me to discuss how we can work on finding an ideal solution for your property.

Do small hotels need a Revenue Management System (RMS) ? Here's how to overcome the challenge.

As a hotelier, you have a lot on your plate. From taking care of your staff and guests to managing your online presence, bills and housekeeping – it’s no easy task. But even so, it is imperative you do not overlook one of the most important things to manage: your hotel revenue. In this article, you will learn what the advantages are of a revenue management system (RMS) for smaller hotels and how it helps to increases revenue.

Smaller hotels are in a very different position to larger hotels and hotel chains. But one thing that doesn’t change is the need to get your pricing right. As our friend and world revenue management expert, Scott Dahl says, ‘every hotel needs revenue management software of some kind’.

Many hotels are unaware that there are solutions tailor-made for their business. The prevailing belief is that revenue management software is complicated, expensive and only for revenue managers. But let’s explore your current challenges and understand how a revenue management system (RMS) can solve these for you.

RMS – Do I Need It?

Challenge #1 Time Resources

Running a hotel is complicated and involves juggling many different responsibilities. A hotel owner may be the sales manager, marketing manager and receptionist all at once. From checking-in guests and organising staff to managing your accounting, there is a never-ending list of jobs for the small hotelier. Then, after all that, you have to run numerous spreadsheets and calculations just to get your prices right? Plus, your competitors are checking prices of other hotels at least two times a day. An impossible task for small hotels given the above.

How Does The RMS Solve This for You?

When you automate the revenue management process with a tool, you eliminate the time-consuming manual labour involved in maintaining spreadsheets. RMSs collect constantly changing data from multiple sources and store them in one place. This ensures data-driven price suggestions with minimal manual input.

By tracking data from the market, your internal performance and any special events in your area, RMSs recognise the current demand as well as the demand that is yet to come and maximise your hotel revenue. So you can continue focusing on the rest.

Challenge #2 Limited Budget

Running a hotel requires expense for housekeeping, maintenance, salaries and maybe even a minor renovation. Where on earth do you find the money for new technology? There are two sides to making a profit that you should keep in mind; cost and revenue. If an investment in an RMS can increase revenue by a lot more than it costs, then it will be worth the expenditure.

Smaller hotel owners may also be under the impression that with the implementation of a revenue management software comes the costly need to invest in a revenue manager as well. While in the past, it was true that technology was expensive and complicated, thus requiring an expert to navigate, this is no longer the case, particularly for the less complex pricing that smaller hotels need.

How Does The RMS Solve This for You?

The needs of smaller hotels are different than those of the bigger properties. Smaller hotels do not have as many features such as a spa, restaurant or in-room-amenities and their target guests are not that segmented, i.e. corporate business, leisure business, millennials Vs, generation Z and so on. This means you will need to look for a solution that will better suit your needs while costing you less!

When looking for an RMS, a smaller hotel will need high efficiency coupled with simplicity. You’ll need fewer features that are easy to run, resulting in lower costs and no need for the hiring of a revenue manager.

A recent case study shows that not only will investing in RMS cover the expenses of the software but will result in an average increase in revenue of 22%. Costing as little as the price of a coffee a day, companies like RoomPriceGenie offer the perfect pricing solution for small hotels facing the constraints outlined in this article.

Challenge #3 Lack of Information

By doing so many things at once, hoteliers often don’t have the time for anything extra, especially not a thorough analysis of their pricing. Not to mention, frequently checking the competitors is time-consuming and close to impossible.

By covering so many tasks at once, you are likely missing valuable information; events in your local area or booking trends, for example. You are also more likely to make mistakes. Either you are missing opportunities and failing to increase prices when needed, or perhaps you are setting higher rates for the future that aren’t attractive, don’t bring you any bookings and thus cause you to lose your competitive advantage.

How Does The RMS Solve This for You?

Revenue management software is a fully automated tool that saves you a tremendous amount of time. All of the data is calculated in the ‘back-end’, and you are then presented with a price suggestion for any given day; 365 days ahead. This collected data covers what your competitors are doing with their pricing, your guest booking behaviour and a variety of market variables. It then strikes the optimal price, perfectly placing you within your local market and, more often than not, presents it to you in a nice, colour-coded calendar view.

Challenge #4 Need for Multiple Channels

Although small in size, smaller hotels should look into the bigger distribution picture and overcome their competitive disadvantages. Being present on multiple channels, and offering multiple rates should not be a constraint in using RMS, but an advantage. Manually managing the prices on multiple channels (including your own direct booking engine) is impossible.

How Does The RMS Solve This for You?

A revenue management system can be fully integrated with your PMS/CM resolving this constraint in two ways. Firstly, being fully integrated makes it super easy to distribute your prices across channels with one click. Secondly, the way your rates are connected to one another is through established derivation. This means adjusting multiple rates at the same time should not involve any additional effort as the derivation will do the magic on its own.

Challenge #5 Capacity for Calculations

Revenue management is a complex subject that takes multiple factors into account. Not to mention, it requires extra reading, learning and understanding of complex definitions, KPIs and calculations.

It is not just that you have to establish your pricing strategy for the year ahead. But before that, you need to spend a lot of time on analysis and forecasting. Then, you need to look into what competitors are doing against your pricing and whether you will be able to compete and get your fair share out of it. Plus, you need to think ahead and consider any festivals or other special events; these all affect your pricing and the occupancy…the list of things is endless.

How Does The RMS Solve This for You?

Even with the best will in the world, it is impossible to do the millions of calculations a day to optimise your prices. RMS can take all your information and perform the complex calculations for you. It makes the complicated simple, leaving you to concentrate on the bigger picture.

Challenge #6 Complexity of the Software

Historically, RMSs have been over-complicated and dominated by heavy reporting, charts and statistics. Their complex rules and user-experience only gave hoteliers additional stress, instead of confidence in a job well done. The thought of investing in technology that is simply a burden to your operations is an understandable concern. Fortunately, the development of RMS has come a long way, and now there exists the right solution for every hotel.

How Does The RMS Solve This for You?

While the solutions in the past were indeed complicated to understand and use, today’s solutions can be pretty simple and easy to use. Not all revenue management systems available on the market are designed only to be used by revenue managers. There are solutions built specifically for smaller hotels and vacation rentals in mind. Plus, today’s RMS offer simple levels of customisation tailored to each hotelier’s needs and experience. You can have everything you need to understand the position of your hotel in one single overview.

There’s a paradigm shift: from Product to People

We’ve entered the era of undifferentiated hosting options.

Whilst you might keep claiming that your hotel and your rooms have nothing to do with an Airbnb flat, the 2 become totally the same in the eyes (and in the mind) of those who used to be your hotel guests.

Hosts and Hotels have now become competitors.

Just like their main and respective distribution channels: Airbnb and Booking&Co.

Because despite the pandemic, the combo Airbnb+Hosts started years ago deploying what travellers were desperately looking for: Experiences.

It’s a paradigm shift: from Product to People, with the latter (travel guests and prospects) being the core the former should be built upon.

The reddest ocean of all has become even more red.

Are we entering the era of Branding and Retailing?

E-commerce top players have set the norm for online shopping. Travellers expect to be able to shop for a hotel room like they shop on their favorite online store. With Fusion from D-edge Hospitality, our next generation website range, elevate the online booking experience of your hotel and watch your conversion rate skyrocket!

Feel free to contact me to discuss how we can be of help.

#hotels #directyourbookings

5 Reasons to use an Automated Revenue Management System in 2021

As we waved goodbye to the year that was 2020, many of us were probably guilty of thinking the arrival of 2021 was going to provide some sort of magical end to the ongoing stresses of running an accommodation business during a global pandemic. So if you woke on the first day of 2021 with a mixed feeling of dread and disdain at the prospect of having to fight through another year of tight financial margins and personal sacrifice, you are certainly not alone. 

Although there is a far brighter outlook for 2021, there is still a huge amount of market uncertainty leaving many hotels, motels and holiday parks at a loss on the best pricing decisions to make moving forward. Room rates seem to be the one thing most small to medium sized properties consistently get wrong at present. Whether it be through not changing rates frequently enough, or dropping prices unnecessarily low, poor rate management is making the lives of small to medium business owners harder than it needs to be. 

If any of the above resonates with you, or you can happily admit that you don’t know quite as much about pricing rooms as you would like, then you will be glad to know that there are a range of tools out there that take the guesswork out of rate management. The rise in popularity of Automated Revenue Management technology means that small and medium accommodation providers can now gain access to all the benefits of a full time Revenue Manager, at a fraction of the cost.

Keep reading to learn 5 reasons why you should implement an Automated Revenue Management system this year.

1. Avoid the Race to the Bottom

One of the main rate management trends seen since the Covid-19 pandemic began is the tendency for accommodation providers to drop prices in order to capture a larger share of their market in periods of low demand. Although this may seem like a good strategy  to increase occupancy percentages in theory, it often leads to a price war where all accommodation providers in your market suffer. Because an automated revenue management system regularly looks at changes in market demand compared to your own occupancy, you can avoid unnecessarily selling rooms at rock bottom prices.

2. Accurately Measure Demand

Will my busy season still be busy? When will international borders open? Will there be another lockdown? These are all considerations that have probably crossed your mind when trying to set your pricing for the next year. Because most tourism and accommodation markets will continue to be unpredictable in 2021 it is important to make pricing decisions that are reactive to fluctuating changes in demand. An automated revenue management system will check the market against your own occupancy to detect any significant changes in market demand roughly every 2 hours. Prices will be adjusted instantly if required. 

3. Minimise Variable Cost

The problem with dropping prices to boost occupancy is that it often leads to far higher variable costs, and significantly lower profits. Therefore it is important to strike the right balance between occupancy percentages and your average daily rate. In a lot of cases being fully booked means you haven’t charged enough for your rooms and will end up having to spend significantly more on cleaning and restocking rooms. Automated revenue management systems work to optimise profits, which means trying to get the highest possible rate for each room, even if that means having a slightly lower occupancy percentage. 

4. Spend Less Time in the Office

An automated revenue management system is designed to be just that - automated. This means setting the system up, letting it run and barely needing to touch it again. Rates are based on a minimum, maximum and median prices which act as the hard limits of the rates generated. Competitors are selected in your area that have active revenue managers working for them so you can be confident that changes in market demand are based around real human decisions. This leaves you free to spend more time off site with the confidence that your rates are in safe hands. 

5. Boost your Revenue

Ultimately the objective of any revenue management system is to make your property more money, and it is no secret that an effective dynamic pricing model is the best way to maximise occupancy and revenue percentages. Here at N. Hall Consulting, we generally see a 10-15% boost in overall revenue for new properties who move from a seasonal ‘set and forget’ pricing strategy, to the Room Price Genie automated revenue management system we integrate with. This sort of revenue gain has been the make or break for some properties who have been on the cusp of going under due to the covid-19 pandemic. 

The Importance of Hotel Positioning in Building Your Hotel Brand

When people think of branding, they maybe think that means getting a good logo. But is this all there is to it? Absolutely not! And it is extremely important in determining the success of your hotel.

What is your brand? Your brand is a combination of your promise to the customer, the role you play for them, and their perception of your merits. It’s the feeling someone has when they think of you.

Branding is heavily connected to positioning. Positioning is working out who you are for and what you do for them. And branding is about showing everyone what your positioning is; associating concrete messages and emotions to that position.

In the hotel space, think about the Accor brand IBIS. What does it mean to you? Basic, clean, standard quality, good price. If you just want a place to sleep at a low price you can confidently stay there. The logo is basic. They are very clear about what they stand for.

Then think about another Accor brand, Raffles. Is their branding similar? Not at all. Their branding is all about old-style luxury with a colonial style.

Now picture another Accor brand – Banyan Tree. They are about luxury too, but this is more focused on wonderful natural experiences in beautiful locations.  

These are the same hotel group, but three very different value-propositions. And they have many more. 

Why don’t they just have one brand – Accor hotels? This is what we will discuss below. 

We’d like you to have a think about your property. Who is your hotel or apartment group for? And what does it stand for? 

We will address this topic in 3 sections:

• First: verifying your target market

• Next: creating an offer for them

• And last: showing that offer

Verifying your target market

Let’s start with the basics of positioning. A hotel can’t be everything to everyone. By trying to attract too broad a market, you will typically end up appealing to no-one and being too expensive for everyone.

Taking your hotel as an example, and examining your target market… Maybe write down on a piece of paper, the top-3 target clients your hotel has. 

For example, your top 3 target markets may be 1) couples at weekends, 2) groups from abroad and 3) business travellers in the week. 

Now look closer at each of these. 

• What is their typical age?

• What is their sociodemographic grouping?

• Where are they from? Which country?

• How much money do they have to spend?

These are more factual. But now think about more abstract things:

• What is their motivation?

• What are their expectations?

• What would they really appreciate?

Now think of your competitors in the area:

• Who are they appealing to?

• What has been shown to be very popular that you can easily copy?

• And looking at it the other way, is there some niche where you can provide better service than them?

To show how the process works, I’ll give an example hotel. It is a modern Swiss ski hotel and is targeting mainly young Swiss people, but also families and foreign visitors with budget constraints but who want something modern and cool. We will come back to this hotel later.

Creating your offer…

There are two parts to creating an offer for your target market. 

The first part is to ask what is it that would appeal to your target market that you can offer them?

This may be best described through an example; and fortunately, we have an example – our modern, cool ski hotel mainly for young Swiss people. 

What do we offer that they want?

• We offer a modern, comfortable building with bright rooms and convenient ski storage.

• We offer a good location for skiing, near a lift.

• We offer good Wifi.

• We have a cool restaurant/bar.

So far, so good. 

The second part of creating an offer is harder. Remember you can not be everything to everyone.  The second part of creating an offer is: what to not offer! 

We’ve just offered all these cool things that cost us money. But how do we get the price down to the right level by not offering things that are nice to have but unnecessary.

Let’s go through our example.

What do we leave out in order to make it cheaper?

• We leave out ski-in, ski-out – the location is good but not total convenience – and this is fine for our market.

• We leave out large rooms. Families would appreciate them but in general, our guests are happy with small rooms.

• We leave out having the reception staffed all the time. We have 3 hours of office hours per day and have self-check-in. This is also fine for our target group.

You can see here that in the areas that are not key, we make sure that we offer enough, but not more than that.

Think about this for your hotel. First, how can you make the offer better for your target markets. Then what are you currently offering that you could do without, in order to cut costs.

Showing your offer

Part 3 of branding is how you show your hotel. You know your target market, you know your offer. How do you present it?

Let’s go back to our ski hotel. What should the website look like?

• It needs to be cool and designed with young people in mind

• It needs to show the great views and beautiful modern design

• It will have photos or videos of skiers or snowboarders for winter and mountain climbers in summer

• Overall, it will represent adventure but also modernity and coolness.

But every hotel is different. Looking cool is good for young people. Looking peaceful or having good kids’ facilities is good for families. Looking established and prestigious may be better for older visitors. You need to know your market and work out how to be right for them.

One final word. When we talk about targeting, we don’t mean excluding. You want to make your product right for one group, but ideally, try to avoid ruling out other people completely by choices that you make that don’t offer too much benefit to the target group.

For example, supposing our ski hotel made their main tagline “Skiing without having annoying families there”. Or painted snowboard graffiti murals on every room wall. Or encouraged local drug-dealers to hang out in the bar. All of these may have the benefit of strengthening the bond with the target group, but in our opinion would be unnecessarily exclusionary. 

So to summarise, when thinking about positioning your hotel, you should be thinking about 3 things.

1) Who it is for.

2) What you offer them.

3) how you show the positioning to potential guests (branding).

We have the right tools in place to help your property in repositioning your pricing & distribution strategies to be in line with your branding goals.

Feel free to contact us to discuss. This article was written I collaboration with our friends @RoomPriceGenie

Is your pricing costing your hotel money?

Is your pricing costing your hotel money?

How to make a good pricing strategy for your hotel.

N. Hall Consulting got together with RoomPriceGenie to have a look at one of the most important factors for your hotel's success -your pricing. And today, on a joint mission to provide dynamic pricing to everyone, we gift you our new service that makes getting started with pricing even easier.

We present you our amazing new service called GenieIntelligence, also known as ‘The Email’.

Together, we have managed to squeeze a great deal of our knowledge and a lot of data into a daily email that gives price recommendations, and we would love for you to try it. We have priced thousands of hotels and seen the pricing of many thousands more. So, we thought we would share a few tips for better pricing with you. What would we do if we were to price your hotel?

Pricing Step 1:

Setting up the next year ahead:

The first step of pricing is to make your best guess at prices for the year ahead. This is generally a combination of art and science, especially in the current circumstances. To do this, you could first look on a seasonal basis at how your hotel performed in previous years in different months. What was the average price you charged and how quickly did you fill up? If you filled up too quickly then you can try starting off higher this year. If you were below expectations, you may like to start your prices lower this time. Then you would do the same thing for days of the week. How did you perform on Sundays and what adjustment would you like to make to your average price for Sundays compared to previous years? Ditto for all the other days of the week.You should create a regular weekly cycle of prices.

In current circumstances, history may not be the best guide and you can look at what other hotels are charging. In particular, you should look at what the best-run hotels are doing. The Google Hotel Search tool is excellent for this. Simply click on a hotel and then click on the calendar for dates to see the prices for the future. You can use their patterns to inform your judgement.

Then lastly, think about special dates that you need to be higher. You can use the information from other hotels here too, as well as your own knowledge of local events and holidays.You can use all of these forecasts to create a pricing pattern for your most popular room standard rate, then you can price all other rooms and rates from that with an offset.

All of this process can be assisted by revenue management software, such as that offeredby RoomPriceGenie, but a traditional excel spreadsheet will also do the job.

Pricing Step 2:

Day-to-day management of prices:

At least once a week, but preferably every day, you should be checking what is happening. There are two important things to keep an eye on.

What are your competitors doing? This is very important in these times of uncertain demand. Are they raising or lowering prices? If you are caught on the wrong side you will either miss out on profits by selling too cheaply, or miss out on occupancy by not selling your rooms.

By keeping track of the prices of the best-run hotels you will make sure not to miss out on special dates you may have missed, or even an increasing booking trend for the whole season, as we saw in a lot of European hotels in summer 2020.

The faster you spot these trends, the better.

It is also important to bear in mind that your potential customers are not looking at your pricing in a vacuum – they will be comparing your hotel to their other options. If you are not aware of your competition they can be a step ahead of you.

How is your own performance? You should be always aware of your own pick-up and occupancy for two reasons.

The first is that it signals when demand for your hotel is not what was previously expected. By being aware of this means you are able to change prices sooner to reflect changing demand.

The second is that by knowing how many rooms you have left to sell, you can change your price to try to sell that number. For example, if I have one room left to sell for 2 weeks time, I may like to charge $250 and if I have 40 left, I may want to only charge $150.

By keeping track of what your competitors are doing, how the best-run hotels are changing prices, and how you yourself are performing, you can keep your prices competitive and as high as possible.Once again, technology can help here.

By signing up for the free trial of the GenieIntelligenceemail, or indeed the full RoomPriceGenie product, a lot of this number crunching can be done for you.

Pricing Step 3:

Promotions, restrictions etc:

The next step is good use of restrictions and promotions. There are too many possibilities to list here, but here are some examples:

• On busy nights with quieter nights on either side, you may want to look at minimum stay restrictions rather than raising prices very high.

• When your cheapest available room is no longer available, but you have a large number of the deluxe room, you can upgrade people to more expensive rooms to make the cheaper room available. Otherwise you may miss out on guests who would book the cheaper room but not the more expensive one.

• On nights where you are charging your minimum price but still not filling, you can try increasing your commission on the OTAs for those nights only to try to get your ranking higher.

We offer more tips in our free book of 49 tips for smaller hotels.

Summary:-

Good pricing can seem like a big deal, but when broken down into smaller parts it is both achievable and extremely valuable.

Take the time to get it right and you will be rewarded many times over.

And please don’t forget to sign up for the extended free trial we are offering all N. Hall Consulting users of our new and very special GenieIntelligence pricing email.

👉 +45 40461646
👉 nikolas@nikolashall.com