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Six Effective Pricing Strategies to Maximize Your Hotel Revenues

21 June, 2021

Ascertaining the best pricing for your hotel inventory is a challenging task. If you charge a higher rate than the local competition, then your hotel would miss out on opportunities; and if you charge a very low rate, it would be difficult to break even i.e. cover your operational cost. In fact, an important part of your online distribution strategy would be to ensure that you set the right rates on the right channels at the right time. Hoteliers have devised innumerable pricing strategies but only the most effective ones tend to contribute towards the success of their businesses.

Based on our rich domain expertise and constant interactions with hoteliers, OTAs and other entities in the hospitality sector, ResAvenue has identified a handful of tried-and-tested pricing strategies that have been adopted by prominent hotels through the years.

Let's have a look at some of the effective pricing strategies adopted by successful hotels:

Dynamic Pricing
One of the proven methods of capturing higher revenue is having a smart pricing strategy such as Dynamic pricing in place where the hotelier changes his rates based on the fluctuations of supply and demand. When you are faced with low occupancy during low demand seasons, you can attract bookings by lowering your room rates. During the peak season, when the demand exceeds supply, you need to increase the rates. For instance, if your hotel has 80 rooms and 72 are occupied, you can charge a higher rate for the remaining 8 rooms that are available.

Rate Parity
Rate parity is a strategy of maintaining consistent room rates across all online distribution channels. In other words, a hotelier needs to have the same inventory rates offered throughout all the online platforms including his own official website. It provides transparency for consumers, while it is also often a prerequisite of advertising rooms through major online distribution channels, such as Expedia and

Deeper Segmentation
The most effective pricing strategy would be one where your rates would be fixed according to various market segments and even deeper segmentation. For instance, hoteliers can classify the retail segment into sub-categories, setting rates for each of these sub-categories without linking them to one another. Guest-segment based pricing involves booking of rooms with prices varying according to the type of guests.

Forecasting-based Pricing
For this pricing strategy, you would need to estimate your room occupancy for a particular date(s) in the future. You can smartly tweak your room rates according to your forecasted inventory. To forecast your room rates better, you need to have an insight into your hotel's historical data including occupancy details for the past few months as well as for the same period last year. You would need to consider the current demand and expected occupancy, and make necessary changes in your room rates. Forecasting will also depend on the number of potential guests coming to your area and the competitor strength.

Competitor-based Pricing
To determine a suitable rate for your inventory, it is essential to carry out a strong and comprehensive pricing analysis of your competitors. To achieve this, you need to consider hotels falling under the same segment and star category in your area, check and compare with their rates for each room category, observe the response of prospective tourists and measure the effectiveness of their strategies in terms of attracting guest bookings. It is also vital to study the time of the year when competitors increase and decrease their rates, and offer attractive offers/discounts. Based on your analysis, you can make amendments in your hotel rates so as to offer the most competitive and reasonable pricing to your guests.

Guest Packages
Guest packages are among the most successful pricing strategies adopted by hoteliers. Apart from your room bookings, you could upsell various amenities and facilities such as swimming pool, salons, banquet halls, conference rooms, courtyards, indoor gyms and sports facilities. You can create simple packages such as 'Breakfast' packages that would include an all-inclusive Buffet breakfast which is much more reasonable than what it would have cost the guest if opted separately. Hoteliers must design these packages to attract more guests through attractive discounts, promotions, and personalized offerings.

These six effective hotel pricing strategies aim to help you reach out to a larger target audience, and convert potential guests to maximize your revenue to a greater extent. Applying the right mix of various pricing methods will help ensure that your hospitality business is long-lasting and successful.

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