Hotel room pricing is never easy to perfect, but you don’t need to be a genius or trained data-scientist to get it right at your property.
Last year Airbnb’s head of hospitality and strategy, Chip Conley, stated that while Airbnb could take lessons from the hotel industry on how to deliver high quality service on a consistent basis, hotels could also learn from Airbnb on the importance of hiring data-scientists to improve their chances of converting guests.
Data-scientists working for Airbnb are tasked with helping the company “…navigate through uncharted waters turning hard data into useful insights and compelling stories”. They earn upward of $100,000 (USD) and some roles advertised on its website even require candidates to hold a PhD in a quantitative field. Many job-ready graduates are now coming through Airbnb’s own Data University with classes available in all 22 of its offices.
For a company that a year ago was valued at $30 billion, hiring a team of academically-gifted scientists to crunch the numbers and make data-informed decisions, certainly won’t put a dent in the profits.
But it’s a very different story for the average hotel business looking to act on Conley’s advice of getting more advanced with data storytelling.
How do hoteliers start analysing data when the job feels overwhelming and time-consuming? What data points are important? How should they react when the market changes? And what do hoteliers need to keep ahead of competitors and their rates?
The answer is technology.
Why you need more technology, not staff
Hotels should not be intimidated by the word data, but instead concern themselves with how they’re using it. Data is usually collected in high volume and it can be a complex task deciphering the trends and using it to implement pricing strategies.
It may be tempting to take Conley’s advice and hire a trained professional to do this for you, but the fact is it’s not essential. That’s because, every host on Airbnb doesn’t perform their own data science, rather they utilise their agreement with Airbnb as a technology partner to do this for them.
Hotels can partner with a technology solution to make smarter decisions around data.
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For hotels, they can also partner with a technology provider to help them make smart decisions around data.
One example is a room pricing intelligence tool, such as Prophet, which helps hotels make long-range forecasts, monitor competitors, and produce reports so they can price their rooms for optimum occupancy and revenue. Paying full-time staff who are still prone to human error doesn’t make sense when compared to the automation of a software tool that only incurs a small monthly fee.
The benefits of a pricing intelligence tool
Hours – and in some cases days – can be lost trying to understand and stay ahead of a competitor’s room pricing strategy.
When do they increase rates? How often do they discount? Are your prices on par? Is your hotel offering value-for-money? So many questions. So few answers. And so little time.
Here are six ways a pricing intelligence tool can help you:
1. Information can be acted upon immediately
The figures you glean from your competitors will help you manage your yield as you can increase your average daily rate (ADR) and revenue per available room (RevPAR) by comparing your live minimum/maximum rates against your competitors’. This is based on length of stay (LOS). You can access this information daily or live on request, ensuring you can always hit your targets for the month or the quarter.
2. You can make accurate long-term forecasts
You can get accurate market data up to a year in advance, meaning you can be proactive, rather than reactive, when adjusting your revenue strategy. With a tool like Prophet, you can do this for more than 15 competitors at once, providing expert analysis to your stakeholders in the process.
3. Set your own rules
Instead of assuming what you want to know and when, Prophet enables you to set your own alerts about market fluctuations. Any specific change to a rule you enter will result in an immediate notification, allowing you to respond with fast action.
4. Revenue management is simplified
There are some data analysis tools on the market that can be incredibly complex and clunky, leaving hotels more confused than they were to begin with. Prophet was designed with functionality and simplicity in mind.
The data is broken down in a way that makes it easy for hotels to use and consume, again saving time and warding off any uncertainty.
5. Data is always current
Generating a report out of manually-compiled rate data to benchmark against your competitors is difficult enough. By the time you’ve created the report, the data is likely to be out-of-date.
Prophet generates a snapshot report of your rates across multiple channels and against your competitors in real-time, against any date from today and in the future.
6. A pricing intelligence tool will make life easier on your channel manager
The rates you set in your channel manager need to be more or less on par with your competitors. Underselling will mean a drop in your revenue, while overselling will see a reduction in bookings.
Using a pricing intelligence tool means you can easily track the rate activity of your local market, maintain parity across all your channels, and then use your discretion to make changes.
To take full advantage of your channel manager, you need to be agile and change your rates hourly if necessary, depending on what time of day, month, or year it is.
With the up-to-the-minute data you get from a pricing tool, this poses no issue for you and your revenue will always be in line with your targets. With this data behind it, your channel manager becomes an even more powerful tool.
As with any intuitive technology system the most basic, but no less valuable, benefit is simply the time and effort you save.
There’s no need to waste precious hours trawling through your data manually. And no need to hire a lab of data-scientists. Instead you can use those man hours and money to improve the quality of your guests’ stay.