Revenue Management Best Practices: Never Price by Room Type on OTAs
By Jean Francois Mourier Founder & CEO, RevPar Guru Inc. | October 27, 2013
As a hotel revenue manager, I'm sure that you spend a great deal of time monitoring and analyzing fluctuations in the local market conditions; fluctuations in your competitors' (hopefully, both inside and outside your comp set) pricing; local events, activities and happenings that will affect the demand in your destination; your current occupancy rates; your available inventory across all online and offline channels; among many other ever-changing factors that make revenue management the challenging (but exciting!) job that it is.
That's what makes revenue managers such an integral part of a hotel's financial success; no other individual (or department) has such a direct impact on how many guests stay at the hotel in a given day, or how much revenue is earned from each booking.
That's why it is so important for a revenue manager to price their rooms according to the best practices in revenue management. You may be asking yourself: "what are these best practices?" REVPAR GURU discusses one pricing misstep that many hoteliers make on a daily basis: pricing by room types.
Are You Guilty of this Revenue Management Sin?
Most hoteliers list more than one type of room for sale on each OTA; room types could range from standard, deluxe, suite, ocean view, city view, penthouse, etc. to something much more unique to a specific property. Of course, each room type has a different price associated with it. Pricing by room types makes perfect sense in the offline channel, where your reservations agent can clearly explain the differences between each room type and where consumers are less likely to be comparison-shopping. But by pricing your rooms by room type on the OTAs, you could have a negative effect on your bookings and revenue.
What Makes Pricing by Room Type so Ineffective?