How do Hotels Grow Rates? 5 Strategies for Success

The annual budget season for hotels has come around again! For dedicated sales teams, this means deep planning and foresight to improve the past year’s successes and overcome potential failures. A big part of this planning is tackling the challenge of rate growth while also driving direct bookings.

Our goal today is to provide 5 successful approaches to rate growth we’ve come across in our work. We’ve been in the trenches, and we hope these tactics will be relevant, successful approaches for your hotel.

We’ll be chatting about:

  • Distribution Segments
  • Competition Analysis
  • Giving your Hotel Website the Advantage
  • Availability
  • Group Bookings

Let’s dive right in:

Distribution Segments

When examining your distribution segments for rate growth opportunities, start by reviewing each segment for the year gone by.

Challenge yourself on the lowest performing ADR segments. Ask yourself what you might have done differently on each segment.

Could you have started your Best Available Rates at a lower figure? By starting with a lower BAR then gradually increasing as the date approaches, you gain more total revenue than you would by starting too high and needing to reduce at the last minute to pick up bookings.

Are each of your locally negotiated corporate rates reaching the necessary annual room night threshold to entitle them to a corporate rate? If not, try giving them a dynamic percentage discount – for example, 10% off your Best Available Rate rather than fixed corporate rates.

It is important that when you review your segments to examine the net rates, subtracting commission paid to each channel from gross gains. If you remove a channel with higher commission rates, could you replace the business with bookings from channels with a better cost per acquisition? It’s very likely that you can, and you’ll be saving your bottom line.

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