Pricing needs your attention today, almost as much as everything else you are doing to get your hotel asset ready to reopen and operate safely. Let’s dive into some of the pandemic pricing principles.
Avoid the speculation Olympics
Can’t fight the urge to speculate? How about we speculate on these issues instead:
* The pandemic has brutally exposed payroll inefficiencies in revenue management and marketing departments across both independent and brand hotels. How many CROs, SVPs, VPs, directors and managers does it really take to pick the right rates for your hotel/portfolio?
* Is your marketing team actually producing any marketing or are they just juggling vendors? What services are you still paying for, and why?
Get to a white board and start coming up with ideas on how to run your hotel leaner than ever before. Let your imagination run wild! This is a much better use of your time.
Dynamic pricing or bust
* Survival needs: How much revenue does your asset need to survive? The keyword here is survive. Don’t forget to account for any changes in fixed costs, debt, payroll, insurance, interest payments, etc. It’s hard to believe there are still owners who do not know the actual cost of an unsold room at their hotel.
* Competitor pricing: With the global hotel market in flux, you need a new approach to researching the competition. You can still look at their rates, but you don’t know what your competitors’ survival needs are. If you are seeing strange pricing around you, you don’t have to follow their lead. Love your hotel product, but check yourself before pricing yourself out of the market.
Revenues vs. Feelings
You cannot deposit your feelings into a bank account. Banks only accept cash.
Numbers and reality are your friends when it comes to pricing decisions. Don’t let your ego and self-worth get entangled with your pricing strategy.
* Make a call
As a hotel owner/investor/manager, this is the time to ask yourself a very simple question: Is your goal to help your asset recover from this pandemic and make money? If you answered yes, then the key is not to overanalyze to the point of decision paralysis. Please make a call and play the market. It is better to make a mistake than stay paralyzed in fear of the rates not working.
* Don’t promo the pandemic
Demand generation is about aligning your marketing and sales efforts. Instead, offer a really good reopening-fall-winter rate for your asset. Focus on the value of your product instead of giving 50% off to anyone clicking on an email. Instead of discount/promo codes, offer fair rates. No games, just full transparency about the fact that you really appreciate their business.
* Stop OTA warfare
Sometimes it feels like we are living in a simulation. With hotel occupancy worldwide sitting at historic low percentage points, what does a battle cry against OTAs achieve for hotels at this point?
Why would you decide not to work with a global hotel distribution powerhouse while your asset is sitting at under 10% or 20% occupancy? Booking.com and Expedia are suffering too and have been hit with massive layoffs. Meanwhile, if they are sending you some business… what’s the problem? Nothing is free, including direct revenue everyone loves to talk about.
It is an excellent time to collaborate with all channels to make some revenue. There are no perfect answers, but you have to take action.
Using historical pricing or just following others in your market is not an option. It’s okay to make a mistake and then recalibrate. But you have to roll up your sleeves and jump in right away. Whatever you do… don’t throw away your shot!
Read original article