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December 18, 2023

6 Hotel Pricing Strategies to Boost Revenue

In this blog, RoomPriceGenie discusses 6 Hotel Pricing Strategies to Boost Revenue to help maximize your revenue potential.

Hotel concierge showing guests to their room.

Automated pricing software saves hoteliers countless hours of time by taking care of day-to-day pricing decisions. But hoteliers aren’t off the hook entirely. By implementing the following pricing strategies, you can help the solution maximize revenue potential.

 

Start with Clear Objectives

Before establishing the settings in your hotel pricing software, clarify your overall revenue objectives. Do you want to drive higher occupancy or higher rates? Do these priorities change at different times of the year?

For example, if your property is new or recently renovated, you might want to prioritize building occupancy through less aggressive pricing. If your property is well established and demand is strong, you may decide to be more aggressive with your rates.

 

Don’t Be Shy About Pricing

Most hoteliers undervalue their property, fearful of pricing too high and losing potential bookings. Yet hotels that charge higher rates than their competitors generate higher revenue per available room (RevPAR), according to research from Cornell University.

When you start out, experiment with the software’s settings to see how they affect occupancy and revenue. And rest assured that the pricing software will only go to the maximum price if the data indicates the market will bear such rates.

 

Improve Guest Ratings

An essential part of rate strategy is ensuring that the service and quality standards you deliver are commensurate with the prices you charge. If you receive frequent complaints about pricing or value, you may need to review your pricing settings.

At the same time, take a good look at the guest experience. Are there ways to strengthen value perception and improve guest reviews without lowering your rates, such as by enhancing amenities and services? 

Higher guest ratings will increase your pricing power. A study from Cornell found that if a hotel increases its review score by one point on a five-point scale, it can increase its price by up to 11.2 percent without affecting occupancy.

 

Manage Room Inventory

Do your entry-level rooms always sell out first, resulting in premium rooms sitting empty or given away as upgrades? Try setting smaller pricing differentials between room categories. And throw in value-adds with suites like breakfast or late checkout. 

If you receive a lot of cancellations, consider offering a deeper discount on nonrefundable rates and charging a premium for flexible cancellation. And if you often book up on weekends, use stay restrictions like minimum length of stay and closed to arrival to boost occupancy on shoulder nights.

 

Contain Acquisition Costs

More revenue is nice, but higher profitability is even better. If many of your bookings come from OTAs, the commission fees are cutting into your profits. If your pricing is right, you shouldn’t need to avoid OTAs, but you may want to lower your dependency on them.

Before participating in promotions that require higher commissions or discounts, calculate the total costs and net rates. If you can sell those rooms on lower-cost direct channels instead, you will be much further ahead. 

 

Generate Demand

Pricing software is designed to optimize rates for existing demand. You will achieve even better results by engaging in marketing activities that generate higher demand. And that starts with the basics.

  • Your website should feature high-quality imagery, helpful information, and simple navigation, with a real-time booking engine and a best-rate guarantee. 

  • Your profiles on OTAs, Google, and distribution channels should be detailed, appealing, and up-to-date to help drive conversions.

  • Promotions advertised by email and cost-per-click ads on Google, Facebook, or Instagram can be an effective way to entice guests back and find new guests.

Working together, hotel operators and pricing software make the perfect team, combining the strategic thinking of hoteliers with the speed and efficiency of automation to drive more bookings at higher rates – all day, every day of the year. 

Want to learn more? Checkout our free guide, How to Capture More Revenue with Automated Pricing.

Want to learn more about how RoomPriceGenie can help you?
Book a demo and learn how hoteliers like you are using RoomPriceGenie to drive revenue through better pricing.
Reach out today. We’d love to connect.

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