Hotel Pricing Strategies…Mistakes that drain profits

Mistake #1: Not having a clear pricing strategy

A good hotel strategy includes multiple elements like occupancy rate, competitors, guest type, etc.

Every hotel is different but hotels that rely only on one element to set their price tend not to increase their profits in the long term.

If you want to have a better year then you need to consider how you set your price and start thinking about what strategy are you going to use to set the price.

Our tip is to include and test different elements.

Don’t rely only on one.

Mistake #2: Not considering upgrades, up-selling or cross-selling

This is not about trying to squeeze as much services as you can to the guest.

When you understand your target markets and you train your staff to be able to sell these extra services this is a combination that you can use to increase profit.

Once you have a front desk that knows what the guests need and is able to upgrade them by providing a better room or include a package with food, activities, or anything you can offer then you can start implementing more advanced strategies to increase bookings.

Give you a simple example:

Step 1: Set your basic room lower than the competition. By doing this you will bring more people interested in your hotel.

Step 2: Set a plan that takes this potential guest into the different packages you have. We have cases of hotels that 70 -80% of their guests ended up taking one of the packages.

This strategy requires a lot of work and to be aware on your target market needs.

Mistake #3: Having Promotion/Discounts all year long

You will think that by having offers all year you will bring more guests which translate into more profit for your hotel. But the truth that profits have a correlation with the occupancy rate of the hotel that not translate necessarily with an increase of profit after taking the costs of operation.

This is the deal…

Promotions and Discounts are a short term strategy to increase occupancy when you need to increase but when you use it for a long term i doesn’t have the impact that you want.

So. Make sure that are for a time limit and that people know that it has a limit so you can get that boost in your occupancy.