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How to capture more revenue with automated pricing

This guide – written explicitly for the independent hotelier – will explain the concept, strategies and benefits of automated hotel pricing. We’ll show you why automated pricing is the secret to capturing more bookings, higher room rates, and more revenue every day, even while you sleep. That is if you have time for sleep.


How to capture more Revenue with Automated Pricing Book Cover


Pricing Strategies to Boost Performance

While automated pricing software will take care of day-to-day pricing management, hoteliers aren’t off the hook entirely. These strategies will help support the system and ensure the most favorable outcomes.

Start with Clear Objectives

Before establishing your hotel’s settings, 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.

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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 your 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 service and quality are commensurate with the prices charged. If you receive frequent complaints about pricing or value, you may need to review your pricing settings and the guest experience.

How can you enhance services and amenities to strengthen value perception, exceed guest expectations, and earn rave reviews? 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.

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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 throwing in value-adds like breakfast or late checkout with suites.

If you receive a lot of cancellations, offer a deeper discount on nonrefundable rates and charge 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.

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.

This starts with the basics:

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

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

• Promotions sent to your email database and cost-per-click ads on Google, Facebook, or Instagram can be effective ways to entice guests back and find new prospects.

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For more tips and ideas, check out our guide.