In the conclusion of this two-part series, let’s look at a few factors that help you decide which hotel room pricing strategies are best for your business.
Picking the right pricing strategy at the right time isn’t as simple as pouring on the discounts every time there’s a hiccup in the economy or room demand dips. That doesn’t mean you shouldn’t offer discounts. Discounts are always an important part of your overall hotel room pricing strategy.
Room Price Segmentation
Segmented room prices attract certain customers to certain types of rooms at a particular time. For example, you know that a range of customers will all want to stay in your hotel during peak tourist season. Within that overall group, some of them are willing to pay more for a room that faces the ocean. Others prefer to pay less for ocean view. Still others are content to pay even less for a landside room.
In the same vein, offer discounts to those customer segments the same way. Reward brand loyalty rather than brand switching. For example, after a landside room customer books for the third time, offer them a free room upgrade to ocean view at an off-peak date the next time they return.
Pay Attention to Costs
Whenever possible, avoid using commission-based distribution channels to fill rooms during low-demand dips. Social media is a great way to get in touch with customers directly, and attract them to your website for direct booking.
Positioning Within the Market
How do you want your hotel to be perceived among your competitors? If low pricing is your only focus, then your aim is going to be having lower prices than your competitors. However, this strategy can backfire if your goal is to position your hotel as upscale/luxury. Discounting prices too deeply could have a negative effect on your hotel’s image, because the prevailing attitude among customers is that you get what you pay for.
Know Your Costs
You must have an accurate picture of your fixed and variable costs, and what it takes to cover your overhead and still turn a profit. This is no time to guesstimate.
Economic or Political Upheaval? Don’t Panic.
While it’s important to stay informed on local, regional, and even international conditions, it’s equally important not to overreact to gusts of economic and political winds. Stay focused on your target customers’ travel patterns. They may change, they may not, but if they do, keep your pricing strategy aimed at adding value for those customers, not just cutting prices.
Make SmarteHotels.com a strategic part of your hotel room pricing and marketing plans. Contact us today!