hand holding different coloured balls all mixed up reflecting impact of rate mixing on hotel revenue

Rate mixing is a practice many hotels use to offer different rates for a singular booking or package. This way, the guests get the most out of the booking by mixing different daily rates. You essentially allow guests to choose rates depending on their needs and mix them together.

NB: This is an article from Mews

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Guests are attracted by the best price available, and hotels are able to attract guests at different rates, optimizing profitability.

How does rate mixing work in hotels?

Rate mixing in hotels gives hoteliers the chance to create strategic offers and get the most out of each booking. At the same time, it ensures that guests get the best rate for each individual night’s stay. It also ensures higher occupancy rates and better revenue per room because at any given time there can be multiple rates at play, and hoteliers are able to maximize the daily revenue per room.

Hotels work with a variety of different rates – seasonal and weekend rates, advanced payment discounts, rates based on length of stay, advanced bookings, and many other types. The idea is that by mixing, you can take advantage of all these types. Even on the same day, guests could be paying a different rate for the same room depending on a variety of factors.

Rate mixing example 

You may have a discounted rate if someone books two nights during the weekday. Let’s say it’s €120 per night instead of €150. The same guest might book two weekday nights (Wednesday and Thursday) and two nights during the weekend, which cost €200 per night. With a more competitive rate, the guest can pay the discounted rate of €240 for the two weekdays and €400 for the weekend.

So, instead of paying the highest rate of €800 for four nights, the mixed rate brings the bill to €640. For hotels, this means selling at the highest rate when demand is high (during the weekend) and offering a more competitive rate when demand is lower (during the week). It’s an effective strategy for maximizing revenue during off-peak periods.

Best practices when implementing a hotel rate mixing strategy 

Now that you have a better idea of how rate mixing works, let’s look at some of the best practices.  

Establish a transparent pricing model 

When implementing this pricing strategy, make sure it aligns with your hotel’s revenue goals, target market and brand positioning. You also want to consider fluctuations in demand, seasonality and competitor pricing in your comp set and be transparent about which rate your guests are booking.

Read the full article at Mews