Hotel rate management

5 common rate management mistakes (and how to avoid them)

Successful rate management is about using the right information. If you want to set smart rates, you need to consider local market demand, seasonality, historical data and competitors’ practices on a regular basis.

Airlines do it best. If you book early, you’ll get a better deal. If you book late, you’ll pay a hefty premium. Airlines know how to set their prices in line with demand. They sell to the right customer, at the right time, for the maximum possible price.

But in the hotel industry, it’s common for smaller properties to only set two rates: ‘weekday’ and ‘weekend’. This quick but simplistic approach means many hotels are not earning as much money as they could be.

That’s why we’ve compiled a list of the most common errors in rate management – and tips on how you can avoid them.

Error 1: Not knowing your market and not planning ahead

When planning their rates, some hoteliers only look as far ahead as the coming few weeks. However, most travellers are booking months in advance of their stay.

It’s important to take these longer booking windows into account. Otherwise, you could be missing out on revenue because your rates are either too low or too high.

If you have historical data to hand, look at last year’s bookings to predict when you’ll experience most demand this year. Then you’ll know which dates you can raise your prices for – and still get bookings.

However, don’t rely solely on historical data. There may be one-off events coming up in your area, like a sports competition or a concert. So you need to think ahead, check upcoming events and update your rates regularly to reflect local supply and demand.

Error 2: Not reviewing your rate history

As we’ve already mentioned, historical data is a valuable resource when it comes to planning and setting your rates.

This is especially true with periods where you tend to experience low occupancy. By identifying these quieter times and analysing your rates, you can be more proactive and increase your occupancy, e.g. with reduced rates or special promotions like ‘Buy 3 nights, stay for 4’. You could also offer restaurant or spa discounts for bookings in this period, or schedule a giveaway on social media to drum up more interest.

Likewise for periods of high demand, your rate history can help you decide how to maximise revenue from the busiest times of year. This, in turn, would make up for smaller returns in low season.

If you don’t analyse how your rates have performed in the past, you risk making similar mistakes in the future – and missing out on vital income.

Error 3: Focusing on your occupancy over your revenue

A full house is the sign of a booming business, right? Not necessarily. If you’re repeatedly selling out all your rooms, the reason could be that your rates are too low.

When it comes to occupancy, it’s important to weigh it up in relation to revenue. For instance, if you add up your operational costs per occupied room (staffing, cleaning, breakfast, etc.), are you making enough of a profit?

Your aim should be to make the most revenue possible for the lowest occupancy. So it may actually be more productive to sell fewer rooms, but at a slightly higher price.

Error 4: Not having your own direct sales channel

Listing your property with OTAs like is a key part of establishing an online presence and generating solid revenue. But it’s only part of the equation.

If you don’t have a direct channel to sell through, you’re missing out on other vital commercial opportunities.

With a dedicated website, you can showcase your property in your own personal way – and accept direct bookings. Not only will you pay less commission on these bookings, you can offer guests special deals on your website that they won’t find elsewhere.

Error 5: Not analysing your competitors

If you want to stand out against your competitors, it’s crucial that you first understand who they are.

Once you know who you’re competing with, keep a regular eye on what rates, deals and packages they’re pushing on their website or social media. That way, you can better position your rates to attract more guests.

So as you can see, it’s very easy to slip into certain habits when it comes to your hotel rates. But if you don’t question your decisions and processes, you risk missing out on a lot of extra business.

However, there is hotel management software that can simplify the process of planning, setting and adjusting your rates. Using BookingSuite RateIntelligence, you can update and manage your hotel prices with confidence. With a clear pricing overview of your competitive set and a forecast of your local market demand, setting your hotel rates is easy and efficient. Learn more about BookingSuite rate management tools or use the button below to update your hotel room rates today.

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1 Comment

  1. Morris poita
    June 21, 2018

    Hi thanks for your email so much say thanks to for campaign for held us the small lodge. And we a really happy.


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