A Hotelier's Guide to Price Intelligence: What, Where, Why, When, How
By Christian Koestler President & CEO, Lixto, Inc. | March 13, 2011
Hotel revenue and general managers know that a firm grasp of marketplace pricing dynamics is critical to maintaining a competitive edge. To stay ahead, they must employ effective short- and long-term rate optimization strategies that rely on accurate, rapidly updated market data. To compound matters, use of the Internet as a formidable sales tool is changing the rules when it comes to revenue management, making for a more complicated, faster-moving challenge than ever.
At a time when the strategic importance of responsive rate management has never been greater, hoteliers are finding that monitoring hundreds -- or thousands -- of websites for the most accurate data is a monumental task that grows in complexity each day. The real-time nature of the Internet means that revenue and general managers must abandon inward-looking cost-plus rate models in favor of more rigorous outward-focused knowledge-based strategies.
As a result, more hotel companies are adopting advanced price intelligence as a best practice. Understanding the practice, and its role within business and competitive intelligence, is vital to positively impacting the bottom line in an era of rapidly changing marketing dynamics.
The Role of Price Intelligence
Price intelligence refers to computer-based systems that identify, compare and analyze pricing and other revenue-related data for a business's own operations as well as its competitors -- data that is critical to making informed rate decisions. Providing the ability to instantly evaluate the market impact that competitor rate changes create, price intelligence allows management to gain a deep understanding of what each change means for margin and market share.
Solid market price intelligence facilitates comprehensive modeling and ongoing "what if" analysis that is crucial to rate optimization. In fact, a lack of this type of information leads directly to market paralysis -- the inability to rapidly update and optimize rates in response to market forces, which places the ability to meet revenue and profitability targets in serious risk.