Pricing Your Hotel Rooms with Confidence

By Ravneet Bhandari Chief Executive Officer, LodgIQ | May 07, 2017

Picture this: You're a revenue manager. You follow all the rules. And you're very diligent at it too. When setting the asked for room price for any specific day, you check your hotel's historical rate records, examine what your comp set is charging, and even notice that Beyonce is in town on that night, so you pump up the rate a few bucks more. Seems like the right thing to do, right?

After all, this is the way smart revenue managers and hotel operators have been setting rates for years, and its helped make hotels a lot of money. Particularly, in recent years for many global markets. How could it not be the right thing? Especially since many hotels are probably enjoying impressive revenue.

Yet, that's not the case at all. While you were out pricing hotel rooms with what you assured yourself was a full complement of confidence, the rules went ahead and changed. And with it, everything you thought you knew about perfect pricing evaporated.

To thrive today, we have to understand those procedures that helped us for years are no longer the holy grail in the way they once were and that industry, guests, and data applications have moved on.

Today, pricing with confidence means making decisions based on reams of previously undetectable information. Valuable data we never realized existed because it was invisible to us. We've had the illusion we've attained perfect pricing, but that wasn't the case at all. The good news is, though seemingly more complex, finding confidence in pricing is not as difficult as it seems at first blush.

New Rules of Loyalty

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.