Developing a pricing strategy is critical to most businesses, but how does that strategy need to differ with perishable inventory vs non-perishable?
When an office supply store prices a product such as staplers, there’s really no consideration needed for how many staplers are in stock. There are costs associated with the stapler that need to be covered but the price for the first stapler sold is likely the same price for the last stapler sold. If the stapler does not sell today, it can always be sold tomorrow.
Hotel rooms, on the other hand, are perishable inventory that needs to be sold each day – or revenue opportunity is lost. The number of rooms available to sell – and the demand in the market – should influence a hotel’s strategy. Looking at price alone works well for selling staplers, but to sell rooms and optimize, hotels need an approach that understands the relationship between price, inventory and demand.
So how can hotels use their RM technology to take their revenue strategy past managing price alone and dramatically improve their performance?
Here are three areas of strategic revenue opportunity hotels can capitalize on.
Revenue strategy by room type
Hotels need technology that considers the varying room types they have. Each guest requires different room features; some guests search for a view, some want a certain bed type and others just need more space. With unique demand for each room type, a hotel’s revenue strategy needs to support their guests’ buying behavior.
Today’s automated revenue technology can analytically determine the ideal price, inventory controls and overbooking strategy for each room type within a hotel. Some revenue management solutions are limited in these capabilities and only provide the ability to manually set rate differentials on each room type.