4 Formulas to Improve Your Hotel’s Pricing Strategy

by usuario4 usuario4

8 January, 2018

4 Formulas to Improve Your Hotel’s Pricing Strategy

The most important Key Performance Indicator (KPI) when assessing a hotel’s pricing strategy is profitability.

Technology is a determining factor when optimizing a hotel’s revenue strategy and is, therefore, a direct competitive factor. As a business, the fact of pulling back from a technological level can become an important barrier in terms of interpreting the market and knowing how revenue managers are currently working.


Hoteliers have the challenge of adapting technology to their revenue mechanical processes, using the right tools to further optimize availability, and sell more at the best rates. This leads us to identify which is the appropriate return for each channel and distribute it within the span of the correct market segment, allowing the hotel to earn higher market shares and, consequently, making it more profitable and competitive.


After this small internal analysis of competitiveness factors, at Beonprice  we found it interesting to identify and analyze 4 simple and basic formulas to improve the pricing strategy of a hotel. Therefore, we provide you with these formulas through a series of tips to improve the results of your accommodation:

Tip #1. Integration of the pricing strategy.


For many hotels, having a multi-channel distribution leads to terrible problems. One of the challenges they face is to intercommunicate technology and to unify the distribution. This can be caused both by fearing technology as well as by disregarding the existence of increasingly simple and integrated systems. Aggregating inventory, through direct and indirect inventories, allows you to increase revenues and prevent possible problems. Hoteliers have the ability to manage inventories 24/7, distribute all the rooms at once without risk of overbooking and a very low probability of error. In addition, the connectivity with the PMS system facilitates the duplication of tasks and improves their management, which ultimately leads to a better service for the traveler.


Tip #2. Take advantage of automation.

After integration, the next “link” of efficiency through technology is automation. It’s possible to update and adjust rates automatically in multiple channels throughout the day. Manual management is likely to disappear in certain tasks, which eliminates any possible errors and makes other tasks that were previously very laborious more efficient in comparison. For the hotelier, the main benefit of these procedures results in having a greater availability of time for strategic distribution, real-time problem solution and adequate management of the traveler.


The fundamental advantage of automatic systems is based on flexibility, adjustment of business rules and personalization with regards to the characteristics of the accommodation. By releasing your teams of manual tasks, and by delegating them to tasks more focused on the product, you’re helping them reduce frustration, which, theoretically, increases their productivity-performance.


Tip #3. Dynamic pricing strategies.

Hotels have traditionally worked using fixed pricing approaches based on the best available rate (BAR). The market trend is now more dynamic and consists of working in a more comprehensive way through proposed solutions based on market needs, the competitive set or weather conditions. Optimizing rates on demand, instead of implementing restrictions, will multiply the hotel’s distribution capacity.


Nowadays, hotels have access to a large amount of data on rates related to room type, channels, dates to maximize income without having to close, and so on. Strategies based on the Best Available Rate (BAR) restrict the distribution capacity and, at the same time, competitiveness.


New technologies, as well as their integration in hotel management, booking systems and strategies of revenue management render the hotel pricing matrix from complex to real. This gives them the opportunity to maximize income by selling the right room to the right customer and at the right time, for the right price.


Tip #4. Keep an eye on last minute bookings.

The portability and immediacy of smartphones or tablets have changed the traveler’s consumption habits. Reservation processes have increasingly standardized in this type of devices. According to a study conducted in 2016,  Criteo found that in Q1  of that year, 27% of the global travel reservations were made by means of a smartphone. When it came to hotels or OTAS, 40% of hotel bookings were generated through mobile devices, within 24 hours prior to the check-in, online travel agencies received 67% of reservations through mobile devices. This is a high figure in comparison with 41% generated by the hotels themselves.

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