The hotel industry tends to be exciting to everyone. Excellent facilities, well-furnished rooms, top-notch hospitality, et al.; all these are necessary to create a seamless, pleasant experience for customers. As with any service, this comfort comes at a price, which the customers have to pay. A more in-depth insight into the industry reveals that things could be a little bit more tricky and complicated, as hotel operators have to grapple with lots of information for the sake of good customer experience. With hotel revenue management taking centre stage nowadays, hotel owners have to strike a balance between customer satisfaction and profitability. One of the procedures employed by hotels to deliver the best possible experience to guests while generating revenue is pricing; this plays a critical role in the success of not just hotels, but any business. A good pricing strategy does wonders in terms of revenue generation, without risking losing customers.
A well-designed pricing strategy is an essential ingredient and a giant step in the right direction, as far as hotel revenue maximisation is concerned. For consumers, a price may just be a figure created by the hotel and which may be changed at the whims of the management. The reality is, however, a wholly different thing. Hotel owners have to delve deep into the pricing strategy to get a perfect sense of this essential aspect of the business. Several factors are usually taken into consideration when trying to set prices, with supply and demand being one of the most critical aspects. If the demand is high, hotels will set higher prices. The dynamics of demand and supply also reveal that hotel bookings tend to rise with lower rates. However, this occurs at the expense of high revenue generation.
Higher prices, on the other hand, cause more vacant rooms. This means that prices can effectively be manipulated to lower or increase demand at any given time. Competition is another essential factor to consider when setting your hotel prices. You will need to know what your competitors are charging for the same services. You can decide to either lower the costs slightly or charge the same prices but improve your service quality. Of course, you will need a game changer, which will make customers choose your hotel.