Rate Integrity at Times of Economic Crisis Part 2

It is safe to say that the world has changed. The hotel revenue management strategies that worked a decade ago may no longer work today. But throwing all rate integrity strategies out of the window isn’t right either. It is crucial for hotel revenue managers to be smart in formulating and implementing yield management techniques in today’s business and leisure environment. Discounting across the board might increase hotel occupancy, but it may not necessarily increase hotel RevPAR and boost profitability.

So is avoiding drastic rate discounting a good strategy? It might sound like it but at the end of the day, hotel revenue managers still need to find a way to fill out those rooms. A creative and dynamic solution is required to solve this problem. Rate discounting might just do more harm than good over the long term. Here are some proven strategies to check out:

Rate Parity – though this can be used as a guideline, it is not a law. Revenue management staff knows that hotels need to please distributors in order to succeed. Without hotel rate parity, making a hotel profitable is difficult, if not nearly impossible. Adapting the strategy to certain market changes and being dynamic builds on the success.

Price Fencing – reward guests for loyal stays. If they stay for a week, maybe you can offer then 1 night free. Or if they reserve for five nights (or any length you have in mind), give them steep discounts.

Lead Time Pricing – giving early bird discounts is still a strong strategy. Determine your booking window and then before the usually pick-up curve, this is where you can offer the discount. Your competition might still be asleep while you are eating a significant portion of their market share.

Rate Integrity – this is what the article is all about. It is actually not necessary to maintain your old rates. However, it’s not required for you to go as low as your competitors as well. Just look at the stock market, sometimes it is up and at other times it is down. The same principle works in hospitality revenue management. Just never go too low that your brand itself starts to suffer.