Price differentiation for hotels
How price differentiation helps to maximize your hotel's income and how you can use Happyhotel for this
Price differentiation in hotels
Are you interested in price differentiation and what it can do for your hotel?
Before we show you how yield and revenue management tools can help you do that, let's go to
address the basics of price differentiation and its significance for the hotel industry.
The price differentiation management tool
In the actual definition, the price differentiation a pricing policy measure for selling a product. A product is sold at various prices. Various aspects are considered when designing the prices.
The goal of price differentiation as a marketing tool is therefore always: the greatest possible turnover and maximized profit.
In the past, prices in hotels were only adjusted to the season and agreements were made with competitors. Today, room prices are very flexible and should be adjusted to conditions and demand.
For this reason, there are various aspects to consider and therefore different types of price differentiation.
Most common types of price differentiation
Different prices at different times: Depending on the product sold, may depend on the time of day, season or season.
Examples of hotels: Higher prices during school holidays or for local events
Different prices for different customer groups/market segments: Some specific customer groups receive special offers or discount campaigns.
Examples of hotels: regular guest/company discounts
Different prices for a product on regionally different markets: The product must not be easily accessible at the respective point of sale, meaning that the customer is prepared to spend more money on it — for example for imported products
Hotel industry examples: Hotel chains differentiate prices by location
Different prices for a product based on distinguishing quality features: examples of hotels: room category, location and equipment of the rooms
Benefits of price differentiation
Price differentiations offer many benefits and are a good strategy to maximize profit. On the one hand, their own product portfolio appears larger, and on the other hand, customers have more choice. In addition, they cater to different customer groups and their needs. New markets and new customers are opened up and excess capacities or full warehouses are reduced.
In terms of the hotel industry, this does not just mean customer and guest loyalty and the utilization of low-demand booking times. Categories are also actively sold, additional sales generated and new customers are addressed in a targeted manner.
Price differentiation vs. price discrimination
Both terms are often used interchangeably. More specifically, price differentiation is a Marketing term. It relates to practical strategies for how companies can use different prices to maximize profits. Price discrimination is a term in microeconomics/economics.
Price differentiation vs. yield management vs. revenue management
Yield management is a specific form of price differentiation. Prices are not only differentiated at product level, as explained above. Furthermore, individual “goods” are combined into quotas.
For hotel management, this therefore means: The yield management software uses existing data (for example from your PMS) to find the right room (quota) to the right customers (groups) at the right time for highest possible price for sale. That is therefore the tactical approach.
Accordingly, revenue management is the somewhat broader strategy: Not only should the yield be increased by the highest possible price, but the entire demand is managed through availabilities and prices.
Today, however, no one has to do this in a complicated way “by hand” or with Excel. yield and Revenue management software helps you do that. Use happyhotel and see for yourself how easy it is to increase your hotel's earnings.
and convince yourself
Forget manual price adjustments. With happyhotel, you can maximize your income without constantly checking prices.
