We, at XOTELS, have been talking a lot about rate strategies and pricing for hotels lately. In the articles from our revenue management book we emphasize on the fact that you need to offer a wide range of prices and products to be able to sell to various consumers with different needs and price sensitivity. But some hotels really overdo it…
Scrolling the web over the last week, we have encountered many hotels offering a ‘price puzzle nightmare’ as we call it to consumers. Many different room types and rate groups, some at the same price, even though restrictions and fences differ, some with the same conditions but at different rates.
Many hotels are offering consumers so many product choices that they simply get lost or confused…
Imagine getting this type of result for 5 room types when shopping for a 1 night stay.
Do we really expect our guests to have a master degree in Mathematics or be an Excel wizard to be able to book our hotels?
But you are not only giving the consumer a challenge. How about your revenue manager? The more complex your hotel rate strategy and price matrix, the harder it is to manage. And if updating rates takes a long time, there will be less time for analysis and decisions.
Regardless of the genius thoughts behind your strategy, it has to be easy to understand for our clients, the guest. Clean and simple is something we have to strive for when building the hotel rate structure in our hotel reservation software.
Here a screenshot of a more organized rate offer:
Through testing, and trial and error, we have discovered that you should only offer a maximum of 3 rate plans per room category at the same time.
Even though you might have more available your hotel reservation software should contain filters to only show the 3 best deals. Showing more would merely overload the consumer with information, which could lead to no booking at all.
If your booking engine is set-up well, consumers can up sell themselves throughout the booking process at any time without having to return to the initial screen.
In this way you can phase the exposure of your different rate plans and product offers in 2 steps, without the guest being overwhelmed with a large amount of prices.
Some tips more tips:
- Only show stay 3 pay 2 discounts if they actually are shopping for 3 nights or more.
- If you have an Early Bird offer, show it with the original rate, to demonstrate the value.
- Make sure there is a clear difference in product offer justifying rate difference.
- Don’t make the rate increments to high, small price differences will allow consumers to up-sell themselves…
As always I hope our tips and tricks help you to achieve better results. For more information on how to implement yield strategies in your hotel, click here: revenue management blog, and subscribe to receive our tips and ideas.