What’s the right price for my hotel rooms?21st May 2015
Revenue Management is defined as allocating the right space (room) at the right price at the right time to the right customer so as to maximise revenue. This blog takes a closer look at what is meant by right price.
Price vs value
This is about ensuring that your price is a good value proposition. That does not mean cheap. What are you offering your customers? What is it worth? You need to truly understand where your hotel sits in it market place and be honest about it.
Knowing the competition
You need to regularly review your offer against your competitors in an objective way and ask yourself;
- What services or features does my hotel have that give it a price advantage over the competition? And,
- What services or features do my competitors have that give them a price advantage over my hotel?
To do this you really need to visit them on a regular basis. Things may change that you are not aware of unless you go and see it for yourself.
Think like a customer
Services and features that are the same are neither an advantage nor a disadvantage. Make sure you are looking at these from the customer’s point of view not the hotelier’s point of view. Then set your price to reflect this position. If you have advantages over your competitors then you should have a higher price. If you have advantages and you are cheaper than them, is your customer going to ask – what is wrong with the hotel that it is so cheap?
Typical buyer thinking
If we go back to the first consideration of price vs value, then being the cheapest may not be the best place to be. If you are the best then you need to price accordingly. However for many the typical buyer behaviour is to get a number of quotes. Then they will discard the cheapest as ‘not the best’ and the most expensive as there is the concern that they are being ‘ripped off’, then they will buy the mid-priced product or service as this gives them comfort about this being the best value.
So in summary, know your competitors, be honest about your product and offer good value. Remember to think like a customer.This article was posted in hotel pricing, Hotel revenue management. pricing structure, Revenue Management. Bookmark the permalink. Follow comments with the RSS feed for this post.