Gone are the days of simple strategies, when prices were dropped in low season and hiked up at peak times. The onset of dynamic – even disruptive – OTAs has made pricing strategies complex. Kammelh Kishorre, Founder & CEO of Revmutu, a leading hotel revenue management company explains.
The growth and proliferation of the Internet has changed the mindsets and ensuing communications for travellers and hotels alike. It has brought about the existence of Online Travel Agencies (OTAs) that have been changing the rules of hotel revenue management on an almost continuous basis.
The change has been particularly significant in the last two years. The number of channels has grown drastically. And within each channel there are other streams of business – Flight Plus Hotel (FPH), Corporate Rates Through OTAs, International POS Pricing, etc.
Another game changer has been the explosion of mobile platforms – technology in your hands, accessible anytime, anywhere. Ease of booking and heavily discounted rates means hotels have to catch the attention of travellers on the go, as they blip in and out of booking mode – what Google calls micro-moments.
Amidst all this, the question still remains, “how do I price my hotel room”? Here are some things to consider.
Accurate Forecasting by Day
You need to know how many rooms will be sold at what price and how will you sell your URI (Unsold Room’s Inventory). Your hotel’s channel manager insights are great resource to find this information in one place. Once you have the accurate forecasting, you will be able to maximise your RevPAR (revenue per available room). This will help you to accurately price your hotel correctly by day.
When you’re making a purchase online, do you read user reviews before making a decision? If you are like the majority of online buyers, you probably do. Just like everything else online, holiday rentals rely heavily on user reviews. In fact, reviews are probably more important to vacation rentals as a source of advertising than most other products you can think of. They are integral to your online distribution. Look after your guests and prompt them for online reviews to help grow your RevPAR.
Also called Compset, this is the group of properties that you see as your direct competitors. When you’re analysing your figures, you should map your performance against the compset hotels.
It is important to be careful when selecting this group of hotels. Be practical. Don’t get emotional about your product and services. Find properties with similar products and services, and also a similar business mix. The right compset will help you improve your business in the long term.
It is imperative to understand your channels, and channels within channels. Have a detailed understanding of cost involved with each channel and what will be the end rate you will get after deducting all the costs. Marketing budgets must be strategically implemented to leverage each distribution channel to its maximum potential for an individual property, making sure that low-yielding distribution channels are not displacing demand from higher-yielding channels.
Again, you hotel’s channel manager insights play an important reporting and analysis function – stay on top of them.
Check your availability by day and ensure sell through (percentage of units sold during a period, usually one month) by room type. Fragmented inventory will result in loss of business.
RevMutu is an India-based revenue management company that helps hotels and resorts to improve their RevPAR. Their skilled team of revenue managers bring to the table more than 30 years of combined experience. The company was founded by Kammelh Kishore on 2012. More information on revmutu.com