Prices
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Rates or prices?
In hotel industry is more common to speak of rates than prices. Especially in comparing what customers are going to pay we speak of rates. A lot of aggregators are comparing hotel prices are based on finding the Best Available Rate: abbreviated BAR. Among them, Expedia and Trivago are the most well-known. Aggregators often also give suppliers insights in rate and in benchmarks.
Sales prices for the hotel rooms
There is some information on this subject on the page decisions. Now let's have a closer look at the sales prices for staying in the hotel.
Looking at the sales prices of your hotel the management should decide on last-minute and a rack rate price for the two options weekdays and weekend days.
The idea behind the two prices is that it enables you as a manager to think in a price-“range” for your hotel instead of one single figure. So, reasoning from your strategy, you might think of a price range that fits in best with your strategy. From this min/max range, an average price is calculated that is being used in the calculations. Very important is the explanation of decisions made in each year on how exactly you plan to use concepts like premium pricing, discounting, flex pricing, psychological prices, revenue management, etc. etc. So seize the opportunity to explain your pricing strategy and a good explanation of your choices in combination with your strategy will enhance your occupancy rate.
Rising prices, rates?
You can change your price-range by changing the (lowest) last-minute rate and (the highest) rack rate price separately. We strongly recommend you never to change prices by more than + or - 20% per year, see Finance and room prices, This price range will be compared to the average in the market, and customers will react upon that.
Keep in mind that your revenues, of course, consists of the (average) price times the number of sales. On the other hand, you have your net result (revenues - minus all costs) which also depends on your costs. On the page operating review there is a basic explanation of the structure of the costs and the way you can, or cannot influence them.
Prices weekdays and weekends
As you take over there is a history. The weekdays have been booked mainly by business people who, generally, have been paying a higher price than the leisure market who have been booking weekends. As this is in most countries the case, it will be very hard (nearly impossible) to change this 'logic'.
Other price types
So you cannot use in the prices decisions, separate prices for shoulder season, low or high season. You can use the concept of last-minute (low) and
rack rates. The same goes for renovated and non-renovated rooms. The number of choices is limited: there is four on prices.
What you can do, is be creative yourself and make additional calculation and explain (in the row additional information for your coach) what your ideal price system would be. If this is calculated well, your coach might reward you with a bonus.
Prices banqueting
You also have to decide on prices you will be asking for banqueting. You do have some more possibilities in changing this quickly
Prices Food and beverages and facilities
You can not influence these prices, nor can you influence how they are used. These revenue groups just follow the occupancy rate of your hotel. You can, though, predict them, and calculate them.
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