There are numerous hurdles that a hotelier needs to overcome while running a hotel. Out of which, people only talk about the mainstream ones.
NB: This is an article from eZee Absolute
What I am trying to say here is that there are a lot of underlying voids in a hotel’s operational aspect that goes unnoticed and these are the ones that cause major damages. One such void is a Broken Pricing Strategy. No idea what is it?
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Suppose you have implemented some sort of tactic in setting your room prices. But for one reason or the other, it isn’t driving any results. You still believe that your strategies are fine and perfect, but your rooms are not getting sold, your revenue is going down, and instead of fixing this, you’re focusing on other factors.
This is exactly what happens when hoteliers fail to notice pricing blunders.
So, before you come up with some “supreme” pricing strategy to win the war, first you need to find out why things aren’t working. Meaning, you must carry out an evaluation of your hotel pricing strategy.
There are various pricing strategies for hotels, but that doesn’t mean each of them would work. At times, some of the pricing methods turn out to be useless and impact the hotel’s revenue.
In this section, I am listing all those points that would help you determine whether your strategies are working or broken.
Read all of them and see if you have any of them in place in your hotel.
1. Not maintaining rate parity
Rate parity is the practice of maintaining consistent room rates across all the distribution channels of a hotel. Meaning, the price displayed is uniform across all the OTAs, irrespective of the commission a hotel pays to bring bookings.
It is a prominent element of a hotel’s distribution and pricing strategy. It provides price transparency to potential guests and helps in developing brand trust.
Now, those who are against rate parity, saying it costs business; I want to tell them that there are ways to tackle it. And in one of our blogs, we have explained the A-Z of rate parity. Do give it a read because it is sure to change the way you look at rate parity.
2. Not performing market and compset analysis
Irrespective of the size and type, every hotel needs to know about the current happenings in the market and how its competitors are faring.
What I mean by this is that hotels must perform a compset analysis. That is, looking at hotels in your same area and price range, and evaluating their services against your own products.
A proper compset analysis helps you make informed decisions regarding your room prices and drive more bookings.
So, if you haven’t done any sort of competition analysis so far, then you’re certainly lagging. Because not keeping an eye on your competition is considered to be one of the major mistakes when it comes to hotel pricing strategies.
3. Setting prices that aren’t in line with various segments
One size might fit all but not one price!
The price for corporates, independent travellers, groups, etc. can never be the same. They will always differ from each other; be it in terms of volume, frequency of guests, cancellation ratio, or whatsoever.
Let me give you an example.
Hotel Royale charges $80 for a room to independent travellers. But when it receives group bookings, the price goes down a bit. Why is that the case? Because group travellers book more rooms and they often stay a bit longer.
Further, chances of upselling and cross-selling are also more for hotels.
That is why the rooms are usually sold at a lower price compared to regular bookings.
4. Focusing on profit and not guests’ experience
To be honest, this should go without saying. Overlooking guests’ experience is one of the mistakes in hotel pricing strategies.
