One of the most important decisions that every hotel organization needs to make is establishing their optimal public pricing structure. For some hotels, this can be an overwhelming challenge – they might be new to their market, constrained by parity commitments, or simply looking for an approach that brings better revenue results than their existing one. For other hotels, they might have a proven strategy in mind – but their technology simply isn’t compatible for its successful deployment.
No two hotels are identical to one another – and a one-size-fits-all pricing approach simply does not drive optimal revenue performance for every single hotel. In an industry where stiff competition is growing even stronger, it is critical that hotels evaluate and consider the pricing strategies that will best fit their hotel’s unique needs. This paper will discuss three pricing methodologies available for hotels, who they work best for and considerations that all hotels need to evaluate when establishing their public pricing structure.
Daily Pricing
Daily Pricing is a strategy where a different rate is charged for each night of a guest’s stay based on the price determined for each stay date. The price incorporates all of the demand which stays through that night. “BAR by Day” or “Daily BAR” are alternative names for this pricing approach.
An advantage of Daily Pricing is that any changes in rate due to changes in guest arrival dates and stay patterns are relatively simple and transparent to explain; however, it can become cumbersome to communicate changes in rates for longer lengths of stay, as well as potentially creating guest dissatisfaction if a reservation is extended into a more expensive night. An example of this scenario is a guest extension over the hotel’s peak night of Saturday, resulting in a marked increase for Saturday night’s rate.
Daily Pricing is generally the simplest approach to implement across all of a hotel’s selling systems and channels; however, it may not provide the ability to capture the most optimal revenues based on the demand by the arrival date and the guest’s length of stay.
Daily Pricing tends to work well for hotels with an average guest stay of one to two nights or for properties that have unique room types that are priced and act differently than one another.
