Business targetgroup
Size of the market
There is overcapacity in the hotel market, which makes it hard to reach occupancy rates above 60% during weekdays. It is not clear whether this is due to demand or supply side, but for any individual hotel there is enough market demand to get the hotel profitably occupied during both weekdays and weekends.
We distinguish two different targetgroups, customers and markets
We now look at the second one.
Sales prices
Weekdays account for 4 of the seven weekdays and this means (rounded up) 57% of the total of all available hotel nights (see occupancy rate). The guest are business guests.
Hotel revenue comprises the average (sales) prices times the number of bookings.
A maximum occupancy rate would mean that all 100 rooms are occupied during all weekdays, so 52 weeks x 100 rooms x 4 days (Monday, Tuesday, Wednesday and Thursday). So 20,800 rooms booked for one night. Check the leisure targetgroup page for more information, which will mainly be weekend guests.
Weekdays prices in the past ranged from € 100 to € 140 maximum per room per night, including breakfast.
- the € 100 price has been the last-minute price during weekdays.
- the € 140 price has been the rack rate during weekdays. The rack rate being the (highest) published price without discounts, special deals or commissions.
Revenues have been calculated on the occupancy rate page, you can find the numbers in the operating review.
Of course, there are many different pricing strategies you could apply throughout the year. However, to keep things simple, the family chose not to work with seasonal pricing, but only differentiated between weekdays and weekends. You should continue using this approach. You are limited to just four room rates. Any additional pricing elements or promotional discounts must be accounted for through your marketing budget or as part of 'other costs' under Decision 10.
The schedule below provides an overview of the situation as you take over. All your pricing decisions must adhere to this structure.
| Pricing system at your hotel | |||||
|---|---|---|---|---|---|
| Days of the week | Rate type | Price | Main Target group | ||
| Weekend | Last minute | €80 | Mainly Leisure | ||
| Weekend | Rack rate | €100 | Mainly Leisure | ||
| Weekdays | Last minute | €100 | Mainly Business | ||
| Weekdays | Rack rate | €140 | Mainly Business | ||
Type of customers
There is no specific information on any type of guests: We do know that business people mainly stay on weekdays. The hotel has always aimed at the business marketgroups and secondly at leisure guests. Therefor the weekdays prices are above the weekend prices. The type of customers attracted so far is an average of the business targetgroups. The average room occupation during weekdays (due to the business guests) is 1.0 per room. Business guests tend to have a single use of rooms.
The records show information on revenues and guest nights.
Guest nights
The latest available numbers on the hotel show a 50% occupancy rate during weekdays: Out of the possible 20,800 room (nights) 10,374 room (nights) are sold; therefor the occupancy rate is 50%. This will bring the number of guest nights at this moment to 10,374 x 1,0 (guests per room)= 10,374 guest nights. So on average in the last recorded year 10,374 guest nights have been registered.
Total guest nights
- Weekends = 13,304 guest nights: 56% of all guest nights
- Weekdays = 10,374 guest nights: 44% of all guest nights
- Total = 23,678 guest nights: 100%
The ratio of guest nights between weekends and weekdays remains the same during all years.
Total revenues from guests
- Weekends = € 704,340 in revenue: 36% of total room revenue
- Weekdays = € 1,244,880 in revenue: 64% of total room revenue
- Total € 1,949,220 in revenue: 100% of total room revenue
The highest revenues are generated by the business guests, by far.
Your pricing strategy is a direct reflection of how you position yourself across different market segments, keep that in mind. When setting prices, carefully evaluate the potential impact on bookings, occupancy rates, overall revenue, and ultimately, profitability.
→ Go! Following the Introduction to the Hotel? Step 9/10 is the Operating review page, click here
