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launch of a new product in the case of newly opened hotels the method can be related to price skimming. The positive side of price skimming is that it helps establish a good reputation for the product generating higher profits. If the product is unique, and high quality it can be sold at the asked price building its niche clientele.


Revenue Management in the hospitality industry has a crucial task in setting the right pricing methods and techniques looking at various fundamentals. Competitors pricing to different market segmentations are analyzed to stay competitive and in the game. With digitalization there are various ways to increase the visibility of your product and attract consumers however the quality of the product, good reviews, and value remain the major deciding factors for conversions. Choosing competitors is a well thought task as it directly affects revenue growth. For example; if you have a premium product and you compare your product with the price point of a lower product you may not have a fair price recommendation. Low prices will attract the wrong clientele which will lead to displacing revenue, and low incremental revenue thereby lower or no profit. Good knowledge of your comp set, and its products are essential to compare. When your room's price points are in line with or below the price of your competitors you may be trying to capture a larger fair share of the market. Better sales conversion happens when your price points are realistic and not over or underpriced. The method of competitive pricing involves analyzing prices and setting prices based on your comp-set. This technique is very widely used in the hospitality industry.

Various revenue management tools are in the market to understand your competition and the hospitality industry spend its resources as it benefits them to up their game. It is not necessary that every market segment must have the same competitor set. Group market segment pricing cannot be compared to a hotel that does not cater to this market or has no facilities for this market. Wisely though competitors will benefit from better price recommendations.

We often see a new product has low rates initially which may be visible for a short period. For newly opened hotels or a new room product, it may be that the price is set lower than the competitors. When the price is set lower than the competitors in a new exploring market the strategy is known as penetration pricing. In such cases, the room rates may be sold at a very low profit per unit o to create an impact on your consumers. The customers are new to your product, as the target market is new. Hence, it is also important for them to have a memorable experience to write a good review and return. The keynote while trying this technique is to ensure that more bookings are converted and visibility of your product in the market builds traction. It may have some adverse effects too as the market targeted may show an initial strong response due to the price offered and later may not buy your product due to the price increase. Some customers may expect lower prices; hence market share a loyalty must be built quickly and a niche to be evaluated. hotel revenue management companies


Penetration pricing is different from promotional pricing as the penetration pricing method is mainly when rates are distributed in a new exploring market or a market segment whereas promotional pricing is usually in the market which is already explored. Promotional pricing is when a rate is offered lower than usual for a very short window into an existing market to increase sales volume. During the pandemic the demand curve had a downward pace, several hotels were struggling to generate pace and one of the strategies was promotional pricing. Lower rates were offered during a short period to generate sales and increase market share. Promotional pricing when combined with a good marketing strategy can help

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