Set up the right rate structure for hotels
The importance of the right rate structure
The basic requirement is to first know your costs in order to be able to determine a lower price limit. Like you yours Price floor You can find out here.
Each hotel has its own pricing policy, which depends on the nature and quality of the hotel service. There is therefore no general recipe for success in the rate structure. However, there are basic requirements that you should definitely consider.
Once the rate structure has been defined, prices must be continuously adjusted to the following factors:
- Occupancy situation
- Volume of demand
- price sensitivity
- weekday
- competitors
Prices must be set at least 365 days in advance. A hotel with 5 categories and 6 different rates would therefore have more than 10,000 pricing decisions per day. To do this, you should definitely use a revenue management system that adjusts prices for you using an algorithm. This allows you to coordinate and automate pricing decisions. happyhotel takes all important influencing factors into account for you.
The central challenge and initial requirement for long-term success in Revenue Management lies in the rate structure. Because without a reasonable rate structure, every dynamic pricing in vain.
The requirements for a functioning rate structure
Basic requirements:
- Traceability and transparency
- realizability
- Strategically useful
Your prices should primarily be for the guest comprehensible and transparent be. It's the only way you can a Price acceptance reach out to your guests. Imagine a hotel that offers different categories. Different prices are justified, for example, by the size and equipment of the rooms. In order to convince the guest to book a higher category at a higher price, the benefits must be clearly communicated to them.
An installment must also realizable be. For that, she must Cost-covering and profitable be adapted to competition and the target group's willingness to pay.
There is always also flow into a rate structure pricing strategies one. Sustainable implementation must always be considered. Are the rates enforceable in the long term?
How to build a rate structure
Which parameters you should set initially:
Lower and upper price limits for the bar rate in single and double rooms
- What is the minimum rate you have to achieve in order not to make a loss?
- What is the maximum rate you can deduct when demand is very high?
Die instalmentsthat you want to offer: Which rates do you want to offer and where? Remember the requirements mentioned above!
Die dependencies the installments:
How are the rates related? Start from your BAR rate and determine differences in percentage or in euros how the installments are related. These dependencies can usually be integrated into your PMS, Channel Manager and/or RMS can be transferred. In this way, you ensure that your rates always remain in the right ratio and avoid mistakes. All you have to do is adjust your BAR rate and everything will change automatically!
Die Category markups (price difference between categories): How big is the difference between the categories?
In our Excel template, all you need to do is enter your price limits, the installment premium and the dependencies of the rates. The rest is calculated by itself! You either have the option to use 5 price levels or only set the first and fifth levels as limits. You can then hide the others. That would be a good idea if you use Happyhotel. Because Happyhotel will then calculate your prices for you dynamically.
Your Excel template for a useful rate structure
Here we have one for you excel created so you can get started right away.
Company contract rates/ corporate rates
Corporate rates are discounted rates for partner companies of hotels and hotel chains. So-called “floating rates” have now prevailed. These work through percentage reductions on the current daily rate and are therefore dynamic.
It is a good idea to provide your partner companies with specific booking codes, which they provide when booking. This allows you to track how high the booking volume of your partner companies is per year. Based on this, the company rates for the following year can be negotiated. This promotes your partners' interest in generating as many bookings as possible. Depending on the company contract, employees and suppliers, for example, can also stay at the hotel with this booking code, both for business and private purposes. The advantage of this is that you increase both your workload and your direct sales.
In addition, the company contracts include other advantageous conditions, such as free room upgrades subject to availability, free breakfast or improved cancellation conditions.
Many booking engines offer you the function of specific booking masks for your companies. The companies reach this page with a corresponding code. In this booking mask, the company then has direct access to the corresponding rates and conditions.
and convince yourself
Forget manual price adjustments. With happyhotel, you can maximize your income without constantly checking prices.
