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February 9, 2024

Pricing is Power: Increase your hotel revenue

In this partner blog, SabeeApp talks about how pricing is power and how you can increase your hotel revenue.

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Finding the ‘sweet spot’ of pricing for goods or services can be one of the toughest decisions for many businesses. Do you “Pile ‘em high and sell ’em cheap”, or conversely opt for a more “exclusive” pitch with a higher price tag and lower sales volume? Consumer goods are sold within a relatively narrow price band, like-for-like, but when it comes to the hospitality industry, hotel managers face more challenging decisions about how to competitively price rooms. Hotel rooms are like fleeting opportunities – what goes unsold tonight is a revenue potential lost forever. The perishable nature of these rooms emphasises the urgency for hotels to optimise their strategies. There are many factors which can alter demand. If there’s a big event happening nearby, then naturally prices can be ratcheted up. But what are competitors doing at the same time, and how can that impact your rates, and profitability? Hotels operate in a very dynamic market with many factors influencing prices:


Boosting revenue

Seasonal variations in room rates are a fact of life, and most managers will keep an eye on upcoming boosts to revenue that come from special holidays or events. Smart hoteliers will also be constantly keeping a weather eye on what competitors are charging, and will adjust their own pricing accordingly. Significant changes in supply and demand can happen very quickly as guests are now adept at surfing the web, looking for the best deals, and best room availability. So while it might have taken days for prices to move up or down in the past, it can now take only minutes. One way to deal with these fluctuations is basically trial and error: Start with a notional price and then adjust it based on customer feedback and market demand, then regularly assess the pricing strategy to adapt to whatever changes you perceive. Sometimes you’ll get it right and win, other times not so much. But unless you feel like gambling your hotel’s revenue, there has to be a better way. That better way is to use an automated system that tracks and interprets massive data sets… so you don’t have to.


Automating change

As a hotel manager, can you imagine having to update pricing twelve times a day, or forecast the next eighteen months of pricing? And yet that’s exactly what RoomPriceGenie does, enabling revenue boosts of up to 22% with a system which is intuitive, and once set up allows ‘hands off’ operation. Leveraging algorithms that work solely with data and fixed parameters eliminates the influence of emotions in the decision-making process. The parameters are all yours, be it maximum and minimum room rates, the definition of room types, or seasonal and day-of-week cycles. However the system is never driving you, but is a constantly alert monitor and advisor to increase hotel revenue in a way which you are comfortable with. Dynamic room pricing used to be only available to the largest hotel chains, and the Online Travel Agents, but data-driven pricing can now be leveraged by any hotel: Tracking competitor prices, monitoring your own booking performance, and optimising revenue.


PMS Integration

A well-built property management system helps hotel management automate every time consuming admin task, allowing managers and staff to be much more effective and guest-facing. Features such as online payment gateway, direct booking, online check-in and check-out, versatile guest messaging, ID scan or complete cross departmental information-sharing can change the hotel game. RoomPriceGenie partnered up with SabeeApp, a hotel PMS which provides a powerful solution to boost hotel revenue, streamline operations, and create unforgettable guest experiences.


Powerful tools for powerful results

So with the backbone PMS from SabeeApp, plus dynamic pricing capabilities from RoomPriceGenie, let’s look at some ways to improve hotel pricing strategies, many of which are encompassed within the SabeeApp PMS package:

 

Dynamic Pricing:

Implement dynamic pricing based on demand, and local events that are happening, by using pricing tools and analytics to adjust rates in real-time, to ensure you capture maximum revenue during peak periods.

 

Seasonal Pricing:

Adjust pricing based on seasonal demand. Adopt higher rates during peak seasons and lower rates during off-peak times to attract a broader range of guests.

 

Competitor Analysis:

Regularly monitor competitor pricing strategies and adjust your rates based on what the market can bear, while maintaining a competitive edge. Always make a point of highlighting unique propositions about your hotel to justify premium pricing (for example, an award-winning chef, or a new spa facility).

 

Monitoring and Analytics:

Use data analytics to track the performance of different pricing strategies. No more of the trial and error approach we mentioned earlier! Instead, regularly analyse your own hotel’s booking patterns and customer behaviour, and general market trends to refine your pricing strategy over time.

These are all features and functions which are automated within SabeeApp’s PMS, and the RoomPriceGenie solution, but we also recommend even more comprehensive steps to take in significantly increasing hotel revenue. These include ‘root and branch reviews’ about what you do and how you do it, taking action in a range of areas:


Knowing your guests

One of the superpowers of any business is to truly know and understand its customers, and this is even more vital in the people-to-people hospitality sector:

 

Online Reputation Management:

The reputation of a hotel takes a long time to build, (and only a short time to tear down if problems aren’t addressed). Maintaining a positive reputation assists greatly in justifying your pricing. Encourage satisfied guests to leave positive reviews on social media and your own website, respond to feedback promptly, and address any concerns. This helps maintain a favourable image, and supports the view that your pricing strategy provides value for money. Constant monitoring and curating of social media as well as Online Travel Agent channels is a must do.

 

Market Segmentation:

There has never been a ‘one size fits all’ guest, but this is even more true nowadays, with many different ‘tribes’ of guests, ranging from Digital Nomads to Silver Surfers, and all points between. Research and identify different customer types and tailor your pricing strategies to them. Offer different packages, discounts, and promotions for various market segments such as those for business, Bleisure travellers, families, or activity groups.

 

Promotions and Discounts:

In keeping with your identification of distinct niche-market customers, run targeted promotions and discounts during low-demand periods to attract more bookings. This can include early booking discounts, or extended-stay discounts. It will often mean thinking creatively about local amenities or seasonal events, and then communicating about these to your target audience.

 

Strategic Partnerships:

Offering joint packages by establishing partnerships with other local businesses or attractions can be hugely beneficial for all concerned. For example, partner with a nearby vineyard to offer wine tastings, or run painting sessions with artists from the community. The key is to make the best use of whatever assets are available to you in the area, and then leverage them to attract guests – and increase your hotel’s exposure and profitability.

 

Upselling and Cross-Selling:

In a similar way, guests can be attracted to deals and offers within your hotel through upselling techniques such as room upgrades, and additional amenities offered during the booking process. A modern PMS will automatically prompt guests to consider upgrades, and of course friendly staff can also do this. Cross-selling can include promoting the hotel’s restaurant, spa and beauty services, or other attractive facilities. This doesn’t have to be ‘pushy’, but is usually appreciated by guests.


5 Effective pricing strategies

Through the adoption of strategies such as these, and staying adaptive to market changes, you can optimise your hotel pricing to increase revenue and profitability. Regularly reassess and adjust your pricing strategy based on the evolving dynamics of the hospitality industry, and for maximum effectiveness, and the best way to do this is through an automated system.

Sounds easy? Well in essence it is, especially with seamless automated systems running smoothly in the background. The art and science of increasing hotel revenue through pricing should also address these factors: 


Pricing Strategy 1 – Dynamic pricing for real time changes

Adopt dynamic pricing to reflect real time changes in room rates in your local area, or during more global rate-changing events (such as during a pandemic or other globally impacting event). By doing this the ‘peaks and troughs’ of high and low demand periods can be smoothed over. And always stay on top of what the competition is charging in like-for-like situations.


Pricing Strategy 2 – Know your market

Clearly identify the different ‘tribes’ that you wish to appeal to, and segment your market accordingly. Not every demographic wants the same thing at the same time. For example, families are more likely to want kid-friendly summer breaks, whereas seniors might be happy with an Autumn wind-down stay, with a little more pampering and rest.


Pricing Strategy 3 – Upsell and cross-sells

Be alive to the possibilities of upsells, cross-selling, and initiatives with other businesses and organisations in the area. There are always opportunities to increase revenue, whether it’s through offering a room upgrade, suggesting a special tasting menu in the restaurant, or offering introductory discounts for health and beauty treatments. This strategy can also include Length of Stay optimisation to incentivise guests to stay an extra night or two, by giving discounts or other attractive offers.

 

Pricing Strategy 4 – Market predictions?

Looking ahead and forecasting where the overall market may be heading is a massively important part of any pricing strategy. Many hotel managers would be very happy to be able to gaze into a crystal ball and predict the ups and downs of future trends. Fortunately highly sophisticated (and often AI-enabled) systems now exist to do just that – taking the guesswork out of future pricing strategies.

 

Pricing Strategy 5 – Be aware of your surroundings?

Of course, always be aware of not just changes in pricing that may be upcoming, but all of the huge opportunities that can also arise seasonally, or because of special events in your area. Big happenings – such as the SuperBowl, or massive concerts (hello ‘Swifties’!) provide opportunities to market to a specific demographic, and ride on the popularity and massive marketing muscle of such occasions. But on a lesser scale there is always something coming up which you can partner with and leverage to increase the revenue of your hotel.


The price is right

Getting the price right for your hotel can be a constant challenge to hotel managers. However it is made very much easier with the adoption of a modern and efficient system such as SabeeApp’s PMS, which can now be coupled with the integrated RoomPriceGenie solution for data-driven room pricing to optimise prices and profits. Please do get in touch with us so we can tell you more. We’re very enthusiastic about helping you to ‘hit the sweet spot’ with pricing, to increase your hotel’s revenue!

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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