Little and often: The winning hotel revenue strategy?

Knowledge of local competitor pricing information is undoubtedly a cornerstone of any successful hotel’s revenue strategy. But, it is what you choose to do with the data that is the differentiating factor between a good financial year and a great one.

Rather than just seeing lines on a graph, it is important for hotel owners, managers, and revenue managers to interpret the opportunities that it can yield.

For example, a hotel owner might know that June to August are their busy months and increase their pricing to reflect this. Conversely, they know that October and November are quiet months, so they lower their prices. This is all well and good, but far too macro.

Irregular large price increases in a competitive market can have the opposite effect on revenue and actually see profitability decrease. A significant price increase can trigger reactions from competition and customers alike.

A higher price at a peak time could see customers looking at cheaper alternatives locally, meaning less business for you and more for your cheaper competitor.

So, how do you win the battle of the local competition?

The answer is straightforward. Rather than large, infrequent price increases, you make smaller, frequent changes to your prices. These smaller changes will go unnoticed by the local competition and customers and, over the course of year, have a significant positive effect on profits.

Let’s look at the maths. A 50-room hotel with 50% occupancy on average sells 9125 rooms per year.

A small, un-noticeable €2 price increase is worth €18,250. Now think how many times per year you can make such price changes. Pretty impressive, right?

So, if your market is competitive, maybe little and often is the key.

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