Rate shopping is, in theory, simple. Hotels compare their rates against the competition, and use this information to set their own prices. But with reams of data to sort through, rate shopping was once a daunting task. That’s all changed thanks to automated rate shopping software.
With this software, hoteliers can bring their rate shopping strategy to the next level—which is more important than ever as hotels compete against mega-chains, vacation rentals like AirBnB and discounts offered by OTAs, in addition to their traditional competition. Perfect your strategy to drive more bookings and maximize your earning potential.
Select Competition Strategically
Identifying your biggest competition isn’t always obvious. Hotels can choose to monitor other hotels in the same area, of the same size, or with similar amenities. A rate shopping strategy is only effective when hotels compare themselves against the properties most likely to attract their guests elsewhere. Think critically about which hotels attract the same kinds of guests as yours, and adjust which hotels you follow on your software service to see if it drastically changes the price comparison rates. You may be in a different category than you think.
Lower Some, Not All, Prices
Being the cheapest hotel in the area helps to attract bookings, but it also compromises revenue. Lowering your room rates to bargain prices is no longer considered the most effective strategy for improving your bottom line. Instead of lowering the cost of every room to meet or beat the competition, lower just one or two categories of rooms. That way you’re attractive to budget-conscious travelers, but can still reap the revenue from travelers willing to pay standard prices.
Add Value to Raise Rates
When competitors are charging higher rates than you, it’s tempting to match them. However, if the quality of the guest experience does not match the price, even satisfied guests will leave feeling disappointed (and wanting to rant about it online). For better or worse, price must always match value.
With that in mind, hotels can justify charging higher rates than competitors if guests perceive they get value in return. Offering perks like a free breakfast or a complimentary tour can attract guests willing to pay full price even midweek, when other hotels are slashing rates.
Focus on Stressed Assets
Any time occupancy is less than 100%, there’s a good opportunity to discount selected rooms. Find out which rooms are vacant on any particular day, and lower the rate to just below that of comparable rooms at other properties. Suddenly, your rooms are the best bargain in the market, and much more likely to attract a last-minute traveler. Plus, it’s accomplished without setting prices so low that the occupancy ends up costing more than it earns.
Make Comparison Shopping Easy
Research shows that over 80% of travel bookings are abandoned before completion. Guests back out for many reasons, but a major one is because they’re comparing prices from other hotels. Instead of using rate shopping software just to adjust rates, you can also use it to demonstrate to guests that your hotel is a great value. Putting a direct comparison between your rates and your competition, right inside your booking engine, gives potential guests the information they need to feel confident about booking. Just resist the urge to fill your entire website with price comparisons—being known foremost as the “cheapest” hotel can make the property sound undesirable.
Take a Holistic Approach
A race-to-the-bottom approach is never optimal—for hotels or their guests. Rate shopping is just one aspect of a much broader revenue management strategy that also accounts for demand, market forces, budgeting opportunities and on-site resources. Ultimately, the best approach makes guests feel like they’re getting more for less, even as hotels steadily raise their ADR.
Having a rate shopping tool integrated into your property management system puts all the relevant data at your fingertips so that adjusting rates takes little time or effort, and you know that every room is priced at the ideal rate 365 nights of the year.
RoomKeyPMS is committed to being the most comprehensive property management solution on the market. That’s why we’ve added the Rate Shopper product, powered by nSight, which can be integrated directly into RoomKeyPMS. Contact us to explore our extensive list of features.
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