With inflation driving up costs, travelers are more price-sensitive than usual.
NB: This is an article from Cloudbeds, one of our Expert Partners
To ensure they’re getting the best value for their money, trip planners are comparing hotel room rates on major OTAs and metasearch platforms before booking. Lodging operators would be wise to do the same.
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For the hotel business, rate shopping is an integral part of a dynamic pricing strategy, providing valuable insights into competitor rates. By monitoring market pricing intelligence, hotels can stay apprised of opportunities to flex pricing power, increase ADR (average daily rate), and lower pricing to increase occupancy. Rate shopping helps answer the eternal question in hotel revenue management, “How much should we charge for our rooms?”
What is hotel rate shopping?
Rate shopping is the practice of hotels monitoring competitors’ room rates and comparing them to their own rates. It can be used as a short-term tactic, such as a spot-check to see what competitors are charging on an upcoming weekend, to manage rate parity, or as part of a long-term revenue management strategy, with frequent rate checks to identify patterns in competitor pricing and determine how best to position one’s own rates.
The ultimate objective of rate shopping is to achieve maximum revenue and profitability for the property by growing the average daily rate (ADR) and occupancy and capturing the optimal business mix. With rate insights, lodging operators can price right every time to drive more third-party and direct bookings.
In the past, hotels checked out competitor rates by performing a daily call-around. Today, it’s much easier to visit an online travel agency (OTA) to compare pricing and track it on a spreadsheet. However, this method is time-consuming and doesn’t capture the detailed pricing data hotels need to make informed decisions.
Moreover, hotel rates change frequently, and the information collected can quickly lose relevance. For these reasons, more hospitality businesses are investing in an intelligence tool to automate the price comparison process and integrate it with other revenue management functions.
6 benefits of a rate shopper
A rate shopping tool offers lodging operators several advantages, including:
- Automate the rate shopping process, freeing up revenue managers from having to maintain manual spreadsheets and allowing them more time to focus on data analysis and pricing strategy.
- Make strategic, dynamic pricing decisions rather than keeping static, seasonal rates or pricing rooms based on intuition or last year’s rates.
- View real-time rate data consolidated on a single dashboard, ensuring that pricing decisions are based on current conditions.
- Benchmark rates against competitors for specific periods, such as an upcoming conference or local event, to identify patterns in market pricing behavior and position strategically.
- Receive advance warnings of future periods of unusually high or low market demand and identify opportunities to increase or decrease rates and tighten or loosen booking conditions.
- Never miss a revenue opportunity. Dynamic pricing is especially important for hotels, given that room inventory is perishable. When a room goes unsold on a given night, that sales opportunity is lost forever!
