Managing and Pricing Hotel Rooms Online

Becoming a master of the universe requires always going up to the 50,000-foot view so you can see what’s going on above all the noise. Few things are as noisy as running a hotel and revenue management, but by sticking to these steps, simplicity will emerge. Focusing on a few fundamentals very well is the key to building a business and managing your empire.

Simplicity starts with standardization. If you have a midscale U.S. hotel, chances are you have singles and doubles with 3 to 5 suites. Therefore, do not offer more than three room types.

Simplicity sells. To learn about the power of simple, just go to a fast food restaurant’s drive-thru menu and see how few items they actually have. That’s so people in a hurry can find what they want faster, buy it, and get on with their day. Don’t have more than singles and doubles for sale online—keep the suites and one-offs to sell at the hotel.

Many hoteliers have fallen into the trap of changing their prices hourly, reacting to competitor hotels doing the same thing. This can turn into a black hole that is neither profitable or effective. Just as with rooms, simplicity sells. Vastly swinging rate changes do not always go over well with your customers.

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A simple rate strategy modelled after the airlines could be:

Projected high demand (special events, high season—start low then raise rate.

Booking window
60 days out—$75
30-60 days out—$85
15-30 days out—$90
5 days out—$100

Projected low demand (shoulder season, weekends for a business hotel) – start high then reduce rate.

Booking window
60 days out—$100
30-60 days out—$90
15-30 days out—$85
5 days out—$75
Last minute—$65

Here’s a summary of the basics to managing and pricing your rooms online:

1. In all online channels, clearly describe your location and locational advantage or why it’s a hub (midpoint between two larger cities, city center, closest to the airport, or water).
2. List amenities with clear language—avoid flowery language.
3. Sell clean rooms in a well lit property with friendly service.
4. Sell singles and doubles.
5. Use simple pricing based on the booking window.
6. Manage your reviews, always aiming for 70 percent-plus recommend rate. If you receive a negative review, answer it. Always meet bad reviews head on with an action to make it right. This will increase your rate potential at least 10-14 percent against your competition.

Follow these actions relentlessly, and soon your success will be massive.

About the Author
Thomas Magnuson is cofounder and CEO of Magnuson Hotels.

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