Revenue opportunities hotels miss out on when price used to say “yes” to everyone

Blog Soundbites:

  • Today’s hotels are facing unprecedented levels of market competition
  • Adjusting rate alone won’t recoup revenue potential or significantly gain market share
  • Advanced technology uses automated inventory controls to dramatically increase profitability

Today’s market environments have reached merciless levels of hotel competition. New and re-branded hotels are popping up on virtually every corner. Industry consolidation catapulted distribution giants like Expedia and into online Goliaths. Airbnb and other sharing economy wunderkinds have progressed well beyond some kind of side hustle, posing a legitimate threat for stealing market share – especially over high compression time periods.

Getting hit from every angle makes it extremely tempting for hotels to say “yes” to every guest looking to book, and adjusting rate to do so might become a quick strategy for trying to recoup revenue in markets burgeoning with competition. After all, in the midst of all this savage competition, why on earth would a hotel want to turn down a customer willing to pay a premium one-night rate?

Well, for starters,turning down that premium one-night rate often ends up increasing their profitability. At face value, that may sound counter-intuitive, but there’s far more to revenue strategy than selling the highest priced room in the market. While ideal room rates are no doubt an important part of strategic revenue management, using rate as the only consideration for accepting a reservation leaves a hotel at a very unprofitable disadvantage.

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