6 Signs You Might Need to Adjust Your Booking Rates
Revenue management for your hotel or bed and breakfast is key. As the owner of a hotel, your goal is to maximize your profits, and that starts with your room rates.
In this article, we look at six signs you might need to adjust your booking rates to increase your revenue.
#1: You Don’t Update Your Prices Regularly
Sure, it’s easier to set one room rate and leave it that way all year long. But that isn’t the best way to maximize your earnings.
What’s more, you can bet your competition changes its rates on a regular basis.
Consider adjusting your booking rates by season, by day of the week, the rates your competitors are charging, and your current availability.
The demand for your rooms fluctuates greatly by season and your customers’ needs. It’s perfectly acceptable, and encouraged, for you to let your rates fluctuate as well. (tweet this)
For example, if your hotel lies in a summer destination area, you can certainly raise your booking rates during this high season. By charging more for your rooms, you’ll increase your profits, while also setting yourself up to handle slower times in the winter.
You want to increase the rates you charge for your rooms when demand is high. In turn, you can lower those rates when demand is low to encourage more reservations.
Take a look at seasonal trends as well as activity in your area. For example, if there’s a big business conference or special event coming to town, you can also adjust your booking rates.
#2: You Don’t Have a Pricing Strategy
If you don’t have a pricing strategy, it may be time to adjust your booking rates.
Your pricing strategy is much more than deciding what you’ll charge for your rooms in the spring, summer, winter, and fall.
You want to take it a step further, so you have rates laid out for many different circumstances.
Your pricing strategy should meet your long-term financial goals. It should also be in line with what your customers are willing to pay for.
For example, you may lay out the following in your booking rate strategy:
- Rates for on-season
- Rates for off-season
- Pricing based on the day of the week (Fridays and Saturdays higher)
- Weekly rate options
- Daily pricing and/or length of stay pricing
- Event pricing
- Rates for when your hotel is nearly booked (will you charge more?)
- Your competitors’ rates for comparable rooms and amenities
With a plan in place, you can work from a dynamic pricing strategy. This means you can update booking rates on the fly on an as-needed basis. By using a multi-tiered strategy for your booking rates, you increase your reservations and stay on top of your revenue goals.
Another part of this strategy should also be forecasting into the future. This involves you predicting the demand for your rooms and helps you set room rates accordingly.
#3: You Don’t Use Dynamic Pricing
As we’ve discussed in this article, dynamic pricing is the ultimate way to adjust your booking rates on an ongoing basis. Let’s dive into it a little further.
Here are some options for dynamic pricing strategies:
- Occupancy Based: With this strategy, you set room rates based on the age-old supply and demand. You increase room rates when your room demand exceeds your supply. For example, if 20 of your 25 rooms are booked, you can charge more for those five rooms. You can lower them to attract bookings when occupancy rates are low.
- Forecasting Based: In this instance, you change your booking rates based on a prediction of the number of rooms you’ll have available on a future date. You’d use historical data to make these predictions as well as future events in your community.
- Competitor Based: Here you change your rates based on what the competition is charging. You do need to make sure you are comparing the same room types, amenities, and hotel stars. Know what value you offer to your customers as well.
- Length of Stay Based: With this dynamic pricing strategy, you offer a better rate when people stay longer. You do need to remember all of the above strategies as well because your length of stay rates may be different from month to month.
#4: You Haven’t Changed Your Rates Since 2020
Perhaps you lowered your rates when we were knee deep in the pandemic, and you haven’t changed them since.
This is a good indication you need to adjust your booking rates.
The economy in most places is moving along well now, so you may consider moving back to your pre-pandemic pricing strategy.
#5: You Don’t Change Prices for Different Segments
Another reason to adjust your booking rates is if you charge everyone the same amount no matter the reason they are staying with you.
This is when you want to pay attention to different market segments. For example, the corporate traveler and the family on vacation may also incur different booking rates.
The corporate traveler may need a lower rate because they are committing to more rooms or buying a package of meals.
When you package your rooms for any visitor, you can also consider setting booking rates for these instances as well.
#6: You Added Amenities
Let’s say a year ago your property only offered rooms. Now, a year later, you have added an on-site restaurant, a swimming pool and hot tub, high speed internet for everyone, key-less entry, and a spa.
If you are still using the same rate plan for your booking rates, it’s definitely time to adjust them. Your property is more valuable to customers simply because you have more to offer them.
By adjusting your booking rates, you are more effectively managing your revenue.
This helps you be more profitable all year long. Raise them when demand is high and lower them when demand falls. This helps you spread out your revenue to handle all seasonal fluctuations.
Adjust your booking rates, and you’ll find you are more competitive with other properties in your area. (tweet this)
Bottom line – you want to put a strong strategy into place to manage your booking rates on an ongoing basis. This isn’t something you want to set and forget.
Manage your booking rates and create your optimal pricing strategy for increased revenue.
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Images: Takafumi Yamashita and Adrián Macías on Unsplash
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