Today, a hotel’s pricing strategy is defined according to 3 main criteria:
As a Revenue Manager or Hotel Manager, your goal is clear: increase your profitability by boosting occupancy, optimizing ADR, and reducing costs.
But, although you know your target customer very well, it can be more difficult to follow up when it comes to demand and market – both of which are pretty volatile.
Here are few tips to set up market intelligence that is both time and resource effective.
You need to think customer to define your competitive set: What are the other options for travelers instead of staying at your hotel?
Criteria you need to take into account are :
> Geographical location
Location is the 2nd criteria travelers use. So, the first thing to consider are the accommodations around you. For some hotels, things can be a little more complex and may require a benchmark for the destination type: a Revenue Manager at a beach resort may look at competitors at other destinations; a traveler who wants to spend their vacation in a beach resort will likely consider several destination (Maldives, Philippines…)
> Hotel category (Budget, Midscale, Upscale)
This is a question of budget; price is the first criteria when travelers choose a hotel. Adjust pricing for low and high seasons.
Travelers definitely look at how to get to your hotel and they will comparison shop to determine the most suitable option.
> Hotel Size
Total number of rooms to welcome large groups is also important to define your competitive set; for meeting & event planners, this is a major criteria of comparison.
> Independent vs hotel chains
This can have an impact especially for corporate travelers who will be more willing to stay in a hotel chain with a strong loyalty program allowing them to earn points.
> Leisure facilities (swimming pool, spa, gym…)
Some travelers are very interested in hotel facilities. For example, millennial business travelers consider a gym a key criteria when booking their hotel room. Another example is the swimming pool in a resort destination.
> Event organizing capacity
Your ability to organize events will also drive travelers in your hotel.
Remember that your competitive set can evolve – a new hotel opening can have a strong impact.
Aftter you have defined your competitive set, what else do you need watch?
In general, prices are the main information to monitor. The minimum would be to benchmark your Best Available Price. You may want to fine tune your analysis and follow prices by room types (Standard, Deluxe, etc.) In this case, you need to map your room types to your competitors’ room types, because rooms are sometimes named differently from one hotel to another.
Length of stay is also a good indicator to follow, as well as early and last minute purchase policies: this information will help you define or adjust your stay restrictions.
Monitoring your ranking is important as well. Indeed, travelers are willing to pay a higher price for a hotel with the same level of service and located at the same place but with better customer reviews and scores. A 10% increase in TripAdvisor ranking leads to a 4.6% increase in bookings. (Source TripAdvisor)
For 1 out of 4 searches performed, an OTA is offering a cheaper price than a direct booking, and sometimes without the hotel knowing. (Source: Triptease).
Given that disparity can lead to a drop in bookings on your hotel website, it is vital to closely monitor that you at least have parity: benchmarking yourself on all channels can help you drive more direct bookings.
Be informed of all events that can have an impact on demand: this will help you better anticipate busy periods, or boost low periods with dedicated marketing action. Check all events happening up to 20 km around your hotel. The following are some types of events that can drive business to your hotel: sporting events, school vacations, bank holidays, trade fairs (medical, industry, etc.), cultural events, major exhibitions,…
Implement a routine: when you check your hotel occupancy every morning, have a look at your competitors’ moves!
Furthermore, looking at the evolution of prices -90, -60, -30, -15 et -3 days before the arrival date will help you better understand your competitors strategy step by step. Just like in a game, the better you know your adversary, the easier it is to take the lead.
Your competitors will update their prices at least 14 times a week, so make sure you retrieve real time data. It is important to react to your competitors moves.
Imagine you’re on 7 channels with 3 rates, 3 room categories, 5 competitors (or, up to 15 in a very busy marketplace). To monitor all this, it means there are 630 hotel prices to check! Are you ready to spend your entire day just collecting prices?
These tools allow you to create alerts; define views according to your needs and set personalized notifications each time your market changes. You can be the first to react to any market move!
Time to ease your life, boost your performance and gain an edge over your competitors!
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