How can you use revenue management strategies to get ahead in today’s increasingly competitive landscape? By keeping a close eye on the local competition.
Among other things, your hotel should be monitoring the room rates of your competitors so you can see just how competitive your pricing is and react in a timely manner when needed.
Here are a few examples of what you can do with the information at hand:
1. Value-match competitors
One of the ways you can use competitor pricing to increase your hotel’s revenue is by matching them on price.
Set one room rate at the same price point as competitors, and set another room at a slightly higher rate. This allows you to attract deal seekers without sacrificing the opportunity to make a slightly bigger profit.
Keep in mind that value-for-money is the key point here – value-matching goes beyond bringing your hotel in line with your competitors’ rates or simply making your hotel rooms cheaper.
2. Run effective promotions
Continuing with the idea of value-for-money, promotions are one of the best ways to keep up with, and stay ahead of, your competition.
When you notice your competitors are doing it – probably in the lead up to an event in your local area – find out what their rates are, and then set your rates at the lowest price possible to draw a crowd. This is your opportunity to be proactive and truly get ahead of the pack. Look at the details of the room offers. Do they include breakfast? How many nights is the special rate on offer? Are there any spa or restaurant incentives factored in? Think about how your hotel can give guests that little bit extra.
A word of caution, though: you should only do this in short promotional bursts so your hotel isn’t perceived as low-quality or constantly discounting.
3. Meet market demand
Monitor your competitors’ rates to look for signs in the market that indicate demand is increasing and inventory is getting booked out. Then you can react accordingly.
For example, when your competitors increase their rates or you notice their rooms are closed out, increase your own room rates to make sure you’re not losing out on revenue and profit. You can read more about the science of supply and demand in our recent blog.
4. Maximize midweek bookings
While discounted promotions are great, they rarely sell enough to offset reduced revenue. Instead, look at your competitors’ rates and add value to increase midweek bookings.
Create and promote special packages which offer additional services. Think clearly about who your weekday audiences are. We recently wrote about attracting midweek guests, with some great tips for boosting revenue during quieter times. Did you know that for a two-night stay it’s likely your guests will travel about four hours’ drive from your hotel’s location? You can read more on this, here.
Another great approach is collaborating with tourist attractions locally and submit advertisements or editorial to newspapers and websites in population centres within the vicinity promoting midweek breaks that include bus tours, wine tasting trips, or a concert.
5. Sell stressed last-minute inventory
Data from Hotels.com shows that 50% of travelers who book via mobile devices do so for last-minute or next-day stays. This trend represents a huge opportunity for hotels to sell their very final rooms, right up to the last minute. By monitoring your competitors’ rates in real-time, you’ll be able to make the right pricing decisions to ensure those final rooms are sold without compromise.
The best way to do this is through a pooled inventory system via a channel manager. A seamless two-way connection to your hotel’s various booking sites is key to ensuring the constant flow of information is reliable.
Understand the importance of real-time data
Without real-time data, you won’t notice competitor rate changes – or by the time you do, it will be too late to respond in a way that maximizes your own hotel’s revenue.
Having real-time data allows you to assess the level of live demand in the market so that you can react faster, and more accurately – whether it’s increasing your rates or lowering your rates and putting promotions out.
To get this real-time data, you will probably need a pricing intelligence solution – but it’s important that it suits your property’s needs and size. Look for features and benefits that speak to your hotel’s requirements.
Choosing complex technology that’s geared for larger properties will just create more work for yourself – instead, choose something smart and simple that helps you take the guesswork out of your pricing strategy and gives you the control you need.