Revenue managers spend much of their day managing rates and seeking to translate revenue into profit. The greatest reward to this type of professional is to find the ideal public price that attracts customers and increases the profit of their organization.
To accomplish this complex task, you need to realize that each hotel is unique and each guest as well, so your price strategy should follow that premise. After all, the size of a hotel profit margin depends largely on revenue and a strong pricing strategy. It is essential that hoteliers carefully evaluate the options to determine what is best for their business and customers.
For starters, hotels should ask themselves these five questions to determine the ideal approach to pricing:
1. What do my guests want?
Whereas guests are often those who pay the bills, it is important to consider what types of rates they are more willing to pay. In addition to preferences, some regions or audiences may be used to a certain process and change it can result in dissatisfaction or lost customers.
The Brazilian market is sensitive to price and installment. Thus, one must know the public and promote flexibility. For example, some customers prefer to know their daily cost of stay. In this case, the price per day or continuous pricing strategies would be ideal. Other clients, however, may prefer the simplicity of the total price, as a hosting package that offers discounts, for example.
2. What is the best strategy complements my business mix?
To properly optimize revenue, it is important to select a strategy that fits in the hotel business portfolio. The two major considerations are the business model and average length of stay of hotel guests.
For example, a hotel focused on transient airport guests, who have an average stay of one night, the best strategy is price per single daily. On the other hand, luxury destinations and hotels that the public visits during vacations will probably host this guests for a longer period of time. As a result, a flexible package strategy might be the best option.
3. How does this affect my channel and distribution systems?
When considering different approaches, hoteliers should assess the potential impacts on the following:
// Property management systems (PMSs)
// Reservations Central Systems
// Sales systems
// Distribution systems
// Channel management systems
// Booking engine
The direct channel should always be at the forefront of strategy. Intermediated reservations mean revenue, while direct bookings mean profit. The cost of a room is the same regardless of the guest’s origin. Direct booking is the beginning of the guest’s experience with the brand. So, have a special strategy for the booking engine of the hotel website, it should lead the other systems.
4. Is individual pricing possible?
Different guests call for different approaches. Individual pricing is a reality to be considered in direct distribution strategy. This includes the recognition of the customer as an individual.
For example, frequent guests deserve prices ranging according to the ideal of fidelity. A newlywed couple, an occasional guest, a corporate guest: different profiles call for different rates. And this is possible through technology.
5. How can technology help determine the right price?
Through the use of data: collecting it from various sources, make sense of them and using them in communication and pricing strategy is the best and most assertive way of getting the right pricing. The experience starts there.
Find a strategic partner that makes it possible. For example, the technology of Let’s Book, Pmweb’s booking engine, offers the possibility to perform revenue management in real time and through integration with various PMS and Pmweb’s CRM, it enables you to use data for custom communications via email, as individual offers, pre check-in, destination tips and more. Besides, the platform recognizes the guests when they return to the website, making reservations easy and friendly.