Finding the rate groove. What is the rate range by market segment that generates demand for your hotel? You know it when you see reservations pace increase. The rate groove is not only in relation to the comp set rates but the value the consumer finds in the rate. Leisure this year is expected to remain strong despite high gas prices as the unemployment rate ticks down, allowing rate to increase and drive REVPAR. (Hotel News Now, 3/28/12) Instead of building a base at a lower rate, are you ready to take the risk of turning that on its head? “As spring and summer bring higher demand, Denihan (Hospitality Group)will rely lesson building a base in advance and will leave more room for short-term demand, which the company can price higher, Sham (Terence Sham, regional director of revenue strategy) said.” (See above article). If you’ve found that rate groove, it will be easier to take the risk and maximize opportunity in short lead bookings! (From “Shots if Sales and Revenue Management Caffeine by Carol Verret)
Perfect balance in revenue/rate management is the ultimate goal for all of our hotels. Finding that balance is so very hard. It is very easy to get caught up in the rate merry-go-round…..lower rates when you have no-to-very low occupancy to attract customers, raise rates so as to not leave money on the table when occupancy is high….but what happens when you are stuck in the middle?
All of our hotels should be watching their rates very carefully, and adjusting them monthly, weekly or even daily if necessary. If you rate shop your competition often (and not just on the Internet – call them and try to reserve a room – object a little and see how hard or soft they deal with fallback!), then you can get the feel for what is going on in the market. Combine these shops with Star report data, forecast information, and hotel history.
Rate positioning and revenue management is an art – it is not something that you learn overnight. And, it is a lot of trial by fire. The biggest hurdle we have to overcome is panic and worrying that you are going to make a mistake! Charge too much and no one buys, charge to little….well, you know what happens.
In today’s economy, the booking trends are so very short. With “smart” phone technology, oftentimes our customers are booking same day, if not same hour in hopes that we are desperate enough and we are “giving” away rooms. Understand your trends and when customers are booking. Why should we penalize the proactive customer who makes plans ahead of time and books his room in advance? It is just that customer who tends to pay the higher rate and the customer who waits until the last minute gets the best deal! This fact figures high into revenue management.
We need to be in control. Be careful of “deals”, 24 hour sales, etc. IF you participate in these types of offers you must be aware of brand parity issues. I highly suggest if you are going to do these types of deals that you carefully place restrictions on the room types and the stay requirements and not just do a one night deal. The biggest risk is that you not alienate your best customers to pick up business you might not really want.