By Robert Holland FIH, Managing Director UK & Ireland, Hotelpartner UK: How much am I missing out on by using seasonal pricing?
As the summer draws to a close, many hoteliers will be looking back at the holiday season and reflecting as to whether or not they chose the correct revenue strategy.
Did the high demand in 2021 convince them that domestic leisure was here to stay or did they expect normal travel patterns to resume with many Brits chasing the Mediterranean sun, forsaking the wonderful holiday options that the UK has to offer?
What is Seasonal pricing?
Traditionally a hotelier might have adopted a seasonal pricing strategy at the start of the year, believing that the summer holidays were their peak season and therefore would command the highest prices. Those that then left these rates in place may have had a disappointing summer.
How is Dynamic pricing different?
Dynamic pricing means that hotel rates are regularly adjusted using available data. Factors such as demand and availability, daily events, weather data, and even competitor prices are all considered. This multitude of data is then used to calculate the price that leads to maximum revenue with the best possible occupancy rate for the hotel. As summer neared and booking volumes were down on 2021, prices would have been adjusted to drive more reservations.
Gathering this data and then processing it is time consuming and can be difficult when using conventional Excel tables. I would strongly recommend that a well-founded strategy is supported with a hotel revenue management system that assists in the determination of rates & restrictions by means of algorithms or rules. However, the best tools are not enough if the human expertise is missing. Therefore, I would always recommend a combination of a revenue management tool and expert knowledge. At a recent event, I heard that less than 5% of worldwide hotels use a revenue management system.
A small hotel that we started working with in the Lake District almost tripled its income in year one, granted that was following an extensive refurbishment in a busy year but this would not have happened had we based rates on the previous results and left them alone without constant adjustments.
Ask yourself the following:
- Do I still use Excel tables to calculate my rates?
- How often do I adjust my rates and do I check my competitors pricing?
- Should I look at what revenue tools might be available to help my decision making process?
If the subject of developing dynamic pricing through a combination of revenue management systems and human experience is one of interest to readers, the subject is being addressed at Coworth Park this coming November. Full details of the event and how to join the conversation can be found here.
