Revenue Management Best Practices: Never Price by Room Type on OTAs

By Jean Francois Mourier Founder & CEO, RevPar Guru Inc. | October 27, 2013

As a hotel revenue manager, I'm sure that you spend a great deal of time monitoring and analyzing fluctuations in the local market conditions; fluctuations in your competitors' (hopefully, both inside and outside your comp set) pricing; local events, activities and happenings that will affect the demand in your destination; your current occupancy rates; your available inventory across all online and offline channels; among many other ever-changing factors that make revenue management the challenging (but exciting!) job that it is.

That's what makes revenue managers such an integral part of a hotel's financial success; no other individual (or department) has such a direct impact on how many guests stay at the hotel in a given day, or how much revenue is earned from each booking.

That's why it is so important for a revenue manager to price their rooms according to the best practices in revenue management. You may be asking yourself: "what are these best practices?" REVPAR GURU discusses one pricing misstep that many hoteliers make on a daily basis: pricing by room types.

Are You Guilty of this Revenue Management Sin?

Most hoteliers list more than one type of room for sale on each OTA; room types could range from standard, deluxe, suite, ocean view, city view, penthouse, etc. to something much more unique to a specific property. Of course, each room type has a different price associated with it. Pricing by room types makes perfect sense in the offline channel, where your reservations agent can clearly explain the differences between each room type and where consumers are less likely to be comparison-shopping. But by pricing your rooms by room type on the OTAs, you could have a negative effect on your bookings and revenue.

What Makes Pricing by Room Type so Ineffective?

Choose a Social Network!

The social network you are looking for is not available.

Close

Hotel Newswire Headlines Feed  

Sherri Merbach
Suzanne McIntosh
Kathleen Hayn
Lisa Cain
Daniel Link
Brandon Billings
Terence Ronson
Scott Watson
Coming up in April 2019...

Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.