The success of your hotel prices ultimately impacts your occupancy rate which is determined by your overall pricing strategies. Learn how to increase hotel reservations with logical revenue management.
One of the biggest factors in the success of your property occupancy rate is the pricing strategies you implement. Hotel room rates make the difference between sales and no sales, between good deals and bad ones – all of which has a major impact on your bottom line.
If hotel prices are so key to sales, how do you decide on the right pricing strategies? We spoke to a number of our BookingSuite partners and saw that they have three main ways of conducting research to set their hotel room rates:
- 40% monitor online travel agent websites every day
- 40% monitor their competitors’ websites every week
- 20% use a rate-shopping tool every week
All of this monitoring takes time and effort. But there’s a simple solution: RateManager. This tool not only does all your important monitoring work for you, but it also gives you hotel pricing strategy recommendations based on market demand and your competition’s hotel rates.
But there’s more. Wasting time isn’t the only downside of constantly monitoring your competitors’ hotel prices – you can also end up following their lead when you shouldn’t.
Just take a look what happened to Jaume, a Revenue Manager at a 4-star hotel in Barcelona.
Here, you can see the price for his standard double room 100 days leading up to the check-in date. The closer to the check-in date, the higher the hotel prices rise until, at the last minute, prices drop significantly. This may seem odd until you look at what Jaume’s competitors are doing.
When you put their graphs side-by-side you can see that a pattern is occurring. Knowing that hoteliers keep a close eye on their competitors’ hotel prices, it’s hard not to wonder if it had any influence on this sudden drop. For example, if the price of one hotel drops, their competitors then drop, then that hotel’s competitors drop, and so on until the entire market is showing this artificially reduced price.
Jaume may be based in Barcelona, but this is not a behaviour that is unique to his property or even to his city or country’s market – it happens everywhere. According to BookingSuite’s global data for 3- and 4-star properties, 50% of price changes happen within 30 days of check-in and 20% within 7 days.
Just because this behaviour is widespread, it doesn’t mean that it’s right. During this same time that hotel prices are dropping, properties are actually getting their highest pick-up in hotel reservations.
But what if we all approached hotel pricing strategies a bit more rationally? The graph would probably look a little something like this:
Since the number of hotel reservations increase the closer you get to check-in date, the best thing to do is match your hotel pricing strategy to market behaviour, not competitor behaviour. This is where RateManager can help you outsmart your competition.
Our pricing recommendations are both higher and more stable as they are not strictly based on competitors’ data. They also take into account market demand, property objectives (which can be very different than the competition), historical performance and more. Having this holistic view of your property and the market it’s in means that you’re able to develop a smarter pricing strategy that helps your hotel reservations business grow.
If that wasn’t appealing enough, you may be interested in knowing that only 12% of our partners currently use a revenue management tool. This means when it comes to making smart pricing strategies, you’ll be ahead of the curve.
Learn more about BookingSuite’s RateMananger tools or login to your Booking.com account now with the button below to easily optimise your pricing strategies and boost your occupancy rate today!