Hotel profitability is directly tied to hotel room rate pricing strategy. Thus setting a competitive rate is crucial. The wrong approach to room rates will not help you fill your hotel since it will not appeal to potential visitors. Profitability may be enhanced by increasing sales and occupancy through strategic and best available rate pricing strategy.
What is the significance of rate pricing strategy?
Having the best hotel room rate pricing strategy plays a vital role in hospitality industry. If your prices are too high, you will lose business to nearby establishments that offer similar services at lower costs. Yet, you'll lose money if you undercut the competition by too much. You won't make enough to pay your overhead even if you attract more customers.
Finding a best available rate pricing strategy is a complex undertaking. The difficulty arises from considering all variables affecting hotel room rates. To name a few:
- Kinds of accommodations offered
- The worth of the services provided
- The duration of stay
- Competition between suppliers and buyers in the regional market
- Price structures that encourage competition
- Seasonality
Key hotel room rate pricing strategy
Let's take a look at some of the five best available rate pricing strategy that can help you sell rooms and earn maximum room income down to the day of the week.
Forecast- based pricing
You need to adjust your hotel room rate while anticipating the number of rooms that will be available on specific days. To do this, you need to grasp your hotel's past performance metrics, namely, its occupancy rates over the past few months and during the same period last year. This will give you a rough estimate of the occupancy rate on a specified day. You may adjust your room prices accordingly by accurately predicting future demand and occupancy levels. Remember that factors like a rise or fall in the number of tourists in your area, or a surge or drop in the number of businesses in your field, might also affect your projections.
Guest segment-based pricing
In this case, you can charge various groups of guests varying rates for the same accommodation. The key is charging various categories of customers different rates for the same accommodation. You may set different rates for different types of suites on the same day, such as charging more for a sea-view suite and less for a standard suite. Your guests won't mind your prices if they enjoy your goods and services. This pricing approach for hotel rooms can boost revenue and pleasure among guests if it is adequately implemented.
Competitor-based pricing
Understanding your opponents' room prices is necessary to create a competitor-based hotel room rate pricing strategy. Consider competing hotels in your segment and star category. See how passengers react to their room category pricing. Try offering better bargains to attract guests. Examine their hotel pricing strategy to see when they raise or lower rates and how often they give discounts. Compare your pricing to theirs to evaluate whether your guests get value. If done and monitored correctly, this can assist you in understanding what clients are paying and how much they will pay.
Occupancy based pricing
Occupancy-based dynamic pricing boosts room income. Price hotel rooms according to supply and demand. When demand exceeds supply, raise room rates. For example, 45 rooms are occupied, you can charge extra for the remaining 5. This method boosts Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) . Conversely, lower accommodation rates in low-demand seasons entice bookings.
Duration of stay based pricing
Under this hotel pricing method, room rates might vary based on the date of arrival and the overall length of a guest's stay. To determine the appropriate pricing, you must comprehend demand, projections, existing business, and price sensitivity. To increase occupancy, you should change your hotel rates based on your stay's maximum or minimum duration. The most crucial aspect of this situation is that guests pay a single charge for their stay.
In light of the fact that it is of the utmost importance to have an appropriate hotel room rate pricing strategy, you can get in touch with RateGain's pricing strategy specialists to have an understanding of how pricing strategies increase revenue.
