Running any accommodation business is a lot of work, and amidst all things to do, hoteliers typically always put their guests first. Other tasks, like the rooms’ pricing, are often secondary considerations. The reality is that when you put no effort into our pricing and only focus on your guests, you leave money on the table and miss out on revenue. And when you don’t get your prices right, you will have less money to invest in improving your hotel and the guest experience.
As New Zealand emerges from the pandemic, hotel and accommodation demand patterns look different than pre-COVID. And because of this, you must adopt a new approach to pricing to ensure you capitalise on all opportunities…, particularly over this upcoming summer season!
In this article, we want to give you some ideas on how to unlock the revenue potential of your property.
So, what are the missed opportunities that we often see?
Even though the real world is much more nuanced, flat pricing is standard practice for many hotels, mainly because of simplicity rather than anything else. Having only one or two season rates and publishing them on your hotel channels is much easier and less time-consuming than having multiple rate plans that require manual updating.
According to Micrometrict, 85% of travellers say the price is crucial in decision-making. And maintaining flat pricing in today’s dynamic world means either overcharging and missing out on bookings or undercharging and leaving money on the table.
Flat pricing is widespread among hoteliers that are reluctant to invest in hotel technology, such as revenue management software. And with hotel technology becoming more straightforward to use and more affordable than ever, dynamic pricing is accessible to every property owner and operator in New Zealand.
Most properties would make more revenue if they charged more on average. It has been shown in research that this is due to a combination of the fear of having empty rooms, not wanting to lower their review scores, or simply because their loyal guests are so used to their prices. Undercharging is typically more prevalent in smaller accommodations than in larger international chain properties.
Some of the clear signs indicating the low prices (such as filling up too quickly, missing out on special events and overlooking the ‘value for money’ score on OTAs) are often overlooked. By ignoring these indicators, properties often don’t realise their true value and therefore miss out on making more revenue.
For almost all business hotels, Monday is worse than Wednesday. And for many leisure hotels, Saturday night is more popular than Friday. But often hotels apply the same price for every day of the week.
You need to respond to the different demands per day of the week by charging differently per day. A hotel that does price its rooms less expensive on a Monday will likely get more guests on Mondays. And when they charge more for bookings on a Wednesday, they will generate more revenue because of the demand. By considering day-of-week cycles, properties would benefit from more bookings and revenue.
Pricing is not something that you can just set and forget. Property demand trends are constantly changing, and with more and more last-minute bookings, pricings should be dynamic. The reality is that dynamic pricing is only possible with an automated pricing tool.
Not being able to spot periods with low and high numbers of bookings on time will lead to lower revenue. If you are getting booked early in advance, you should raise prices. Conversely, hoteliers often fail to reduce their prices on time, so they dump their prices last minute in a panic. You must respond on time to avoid ending up with lower room rates than usual and losing revenue. Therefore an automated pricing system like RoomPriceGenie can help you keep on top of these ever-changing demand patterns.
This last tip is a more advanced strategy in that it requires a deeper understanding of the demand patterns for the different room types your property may have. For example, suites and family rooms may be more popular during school holidays or over weekends, and therefore the price gap compared to the rest of your room types should be higher over those periods. Conversely, these room types may be harder to sell to corporate guests travelling mid-week for business, so you should reduce the prices for these room types to sell them.
Pricing your accommodation rooms right every night is the most critical thing to do for your property. Many hoteliers need to take advantage of opportunities to maximise their room revenue, which impacts your property’s overall profitability. However, with these tips in this article, you can start lifting your room revenue with some simple steps.
In today’s dynamic markets, manually staying on top of your room prices can be challenging, especially when you focus on taking care of your guests. And when you don’t have the time or ability to make the most of the upcoming summer months through effective pricing strategies, RoomPriceGenie, as an automated revenue management system, could be a great solution to help you. Have a look at www.roompricegenie.com to learn more and start a free trial.