A smart pricing strategy is the best way to increase revenue. What is important is how you derive at the appropriate pricing and what kind of strategy is to be chosen. Big and multi-chain hotels have an advantage with their revenue managers and software specialists who help plan out the right pricing for the rooms. But what about small and mid-size hotels? What can they do?
Here are few tips on how hotels can use smart pricing strategies and increase their market share against other hotels nearby.
Do extensive researches on the competition – Hotels when looking at their competitor must always remember to recognize their similar comparable properties. The base classification rooms of all hotels can be very different, so look at the room size, amenities offered, and facilities available at the hotel. Few hotels may also offer an assorted rate for the same room category on what the cancellation policy of the room is i.e. refundable or non-refundable tariffs.
Pricing should be at par with the competition – Hotels should ensure that their room rates are at par with their competitors and should also make sure that they don’t undersell because the hotel’s revenue can be impacted. At least one room category should have a similar price point as of the competitor. The hotel can earn revenue by selling another room category at a slightly higher rate. This allows hoteliers to attract deal seekers without sacrificing the opportunity to make a considerably bigger profit and increase guest satisfaction.
Psychological Pricing – Did you ever ask why a hotel room costs $199 and not $200? If you felt there’s something at play here, you are definitely right! This odd pricing is simple, yet effective making it the most common pricing strategy used around the world. Studies show that 60% of consumers are drawn towards the product which ends with a 9. This technique is psychologically proven to work, therefore it is advised to implement it to boost room sales.
Upsell your property – As obvious as it is, all hotels need to increase their revenue, but if the competitor’s room rates are low then it can be a complete dilemma. Be a smart seller! Don’t hesitate in increasing the tariff of the room, offer some more extras instead so that the price can be justified. For example, offer late checkout facility, special discount on spa or F&B, or even discount for an additional or extended night.
Monitor historical data – Historical data is essential for setting the right pricing strategy for hotels. Through historical data, hotels can sense which seasons are the busiest and which are not. The hotels can raise their room rates higher during peak seasons since demand would be higher than the supply whereas on slower seasons the rates can be slightly lower.
Each hotel is different, so modifying your pricing which will suit is instrumental for the hotel’s success. As a hotel owner, you will have to decide on what you want to achieve the most with your pricing and then implement a strategy which will work best. Choose the right Hotel Management Software that will draw up essential reports to get the correct pricing strategy.