Increase Hotel Reservations Through Effective Hotel Pricing Strategies

Increase Hotel Reservations Through Effective Hotel Pricing Strategies

Abhishek Saurabh
Abhishek Saurabh

With the ever-increasing competition in the hotel industry, and the travelling scenarios changing post-COVID-19, running a profitable hotel business has become ever more challenging. 


Therefore, it’s high time to rethink and plan effective hotel pricing strategies for your hotel, so that you don’t lose customers over price.

To choose the right hotel pricing strategy for your hotel, several factors must be considered, and this article will cover the most effective hotel pricing strategies that’ll help you maximizing your revenue.

The Importance of Hotel Pricing

The most vital strategy that any hotelier should adopt to increase revenue is pricing.  

Hotels must understand the importance of pricing in the hospitality industry to survive and flourish.

 The solution to the question is simple: if you don’t want to lose visitors or compete in the market, you need to develop a hotel pricing strategy.

It will boost your hotel’s ADR and RevPAR and its entire profitability.

Factors Influencing Hotel Pricing

The whole game of hotel pricing strategy becomes tricky when you have to incorporate many aspects that influence room pricing. Here are some instances:

  • Operating Cost

Employee salaries, electricity and water bills, internet expenses, repair costs, raw materials, selling and distribution costs, cost of advertisement and sales promotion, and other fixed monthly outgoings are included in operating costs. Therefore to avoid losses, it is essential to analyze all costs before price determination.

  • Demand and Market Structure

The pricing of a room is highly affected by market demand. Prices must be adjusted in response to demand. On certain days, demand is quite low, while it is extremely high on others. On the other hand, different visitor segments may react to price adjustments differently.

  • Government Laws and Regulations 

In many countries, price is managed by government-imposed regulations. This prohibits hotels from raising prices unnecessarily.

  • Seasons

The number of tourists to a destination varies during peak and low seasons. Hoteliers must look for these factors and adjust their prices accordingly to maximize revenue.

Now that you understand the aspects and principles that influence room pricing, let’s look at the best strategies to increase your hotel’s revenue.

7 Effective Hotel Pricing Strategies: 

In this article, we’ve listed some of the most effective hotel pricing strategies and the factors that influence them.

1. Occupancy-Based Dynamic Pricing

A hotel’s occupancy-based dynamic pricing plan is a wonderful way to boost revenue. Ensure your hotel rooms are priced based on supply and demand. When demand exceeds supply, you must raise your hotel pricing.

For example, if your 7 to 8 rooms are still vacant during peak time, you might raise the hotel rates to improve business profit.

2. Forecast Based-Pricing

Forecasting is a key element when determining the hotel pricing strategy accessible for future visits. However, to generate an effective forecast, one needs a booking history from the preceding months based on season, events, demand, and promotions.

Hence, you can increase the room prices based on expected demand or availability.

For example, if you realized that you made more money in December last year, you might price your services more strategically in December this year to increase profits.

3. Market Competition-Based Pricing

One of the most important things to consider while competing in the market is what your rivals are delivering. As a result, you must regularly monitor and analyze your competitors’ room rates and pricing strategies. Remember to compare this to your room rates to gain a clear picture of the market’s direction.

When effectively monitored, it can tell you how much customers are willing to spend for a hotel room. You may create your hotel pricing strategy based on this information to acquire an advantage over your competitors.

You can classify your competition based on property type, room rates, star category, special offers or discounts, and promotion channels. As a result, it’s essential to evaluate all of these elements, monitor relevant competitors, and develop a price strategy to help you compete.

4. Length of Stay-Based Pricing

You can customize prices based on the length of stay of your guests using this hotel price optimization technique. The length of stay should ideally be determined by the number of night packages you provide to your guests.

The length of stay pricing can enable a single charge for their whole stay based on their arrival date and total booking night duration.

Festivals and holidays are the perfect opportunities to use this strategy. Here, you want guests to stay at your hotel for at least a few days so that even if you have fewer bookings, the number of nights stayed will rise.

In most cases, the major goal of a revenue manager is to change room pricing based on the maximum or minimum duration of stay to boost availability and company profitability.

5. Guest Type-Based Pricing

Understanding the various market groups is necessary for developing successful and effective hotel pricing strategies. You might charge a different price for the same room for different guests. Analyze the various types of visitors who come to your hotel.

6. Upselling Based Pricing

Upselling is an excellent feature when developing pricing strategies in the hotel industry. You can offer “upgrade” choices to guests while selecting a hotel room. Upselling encourages tourists to spend more money while making a reservation.

7. Loyal Customer-Based Pricing

If implemented right, this is a property management pricing strategy. There’s a great possibility that existing guests will return to your hotel.

However, it would help to use a proper pricing plan to attract repeat customers and generate income. You can give repeat tourists special offers through promotional emails or SMS to encourage them to book directly with you from your website in the future.

You can also integrate your hotel’s loyalty programs, if you have any, to encourage loyal customers to book directly.

Boost Your Revenue With Effective Hotel Pricing Strategies

That’s all there is to it! So, if you’ve been wondering how to determine hotel prices, this article will greatly assist you.

The above are the most effective hotel pricing strategies proven successful for many of our customers. You may put these hotel room rate pricing strategies into action, track the changes, and see the magic happening in front of your eyes.

We’re confident that it will work and assist your hotel’s growth in the future. Applying all of these techniques becomes much easier and more effective with a digital Hotel Property Management System like AxisRooms.

Collaborate with AxisRooms, a complete package for your hotel business, to enjoy the services to increase your hotel’s distribution, efficiency, and profitability.